UNITED STATES FILE NO. 333-01973
SECURITIES AND EXCHANGE COMMISSION -----
WASHINGTON, D.C. 20549 FILE NO. 811-07573
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. --- [ ]
Post Effective Amendment No. 2 [X]
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 4 [X]
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SAGE/TSO TRUST
(Exact name of Registrant as Specified in Charter)
7799 Leesburg Pike, Suite 900
Falls Church, Virginia 22043
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (703) 834-1888
-----
James C. Tso, President
Sage/Tso Investment Management L.P.
7799 Leesburg Pike, Suite 900
Falls Church , Virginia 22043
-------------------------------------------
(Name and Address of Agent for Service)
COPIES TO:
Clifford J. Alexander, Esq. Carolyn F. Mead, Esq.
Kirkpatrick & Lockhart LLP FPS Services, Inc.
1800 Massachusetts Avenue, N.W. 3200 Horizon Drive
Washington, DC 20036-1800 King of Prussia, Pennsylvania 19406
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
[X] ON JANUARY 1, 1998, PURSUANT TO PARAGRAPH (B).
---------------
As filed with the U.S. Securities and Exchange Commission on December 30, 1997
<PAGE>
SAGE/TSO TRUST
CROSS REFERENCE SHEET PURSUANT TO RULE 481A
FORM N-1A ITEM
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CAPTION IN PROSPECTUS
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PART A INFORMATION REQUIRED IN A PROSPECTUS
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1. Cover Page Cover Page of Prospectus
2. Synopsis Prospectus Summary; Expense Summary
3. Condensed Financial Information Financial Highlights *
4. General Description of Registrant Investment Objective and Policies; Risk Factors;
Prospectus Summary; The Trust and the Fund; Investment
Limitations; Description of Permitted Investments and
Risk Factors; General Information
5. Management of the Fund Prospectus Summary; Management of the Fund; Distribution Plan
5A. Management's Discussion of Fund Performance Included in Registrant's Annual Report to
Shareholders *
6. Capital Stock and Other Securities Prospectus Summary; General Information; Dividends and
Taxes; Net Asset Value
7. Purchase of Securities Being Offered Prospectus Summary; How to Purchase Shares; Shareholder
Services
8. Redemption or Repurchase Prospectus Summary; How to Redeem Shares
9. Pending Legal Proceedings *
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PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
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10. Cover Page Cover Page of the Statement of Additional Information
11. Table of Contents Table of Contents
12. General Information and History Covered in Part A *
13. Investment Objectives and Policies Investment Policies and Techniques; Investment
Restrictions; Portfolio Transactions
14. Management of the Fund The Trust; Investment Advisory and Other Services;
Trustees and Officers
15. Control Persons and Principal Holders of Principal Shareholders
Securities
16. Investment Advisory and Other Services Investment Advisory and Other Services
17. Brokerage Allocation and Other Practices Portfolio Transactions
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PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
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(CONTINUED)
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18. Capital Stock and Other Securities Other Information
19. Purchase, Redemption and Pricing of Purchases; Redemptions
Securities Being Offered
20. Tax Status Taxes
21. Underwriters Underwriter
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
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PART C OTHER INFORMATION
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Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C of this Registration Statement.
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* Item is inapplicable at this time or answer is negative.
<PAGE>
AMERICA ASIA ALLOCATION GROWTH FUND
7799 LEESBURG PIKE, SUITE 900
FALLS CHURCH, VIRGINIA 22043
PROSPECTUS January 1, 1998
===============
America Asia Allocation Growth Fund (the "Fund") seeks maximum long-term
capital growth by investing in the equity securities of companies located in the
"Greater Asia Region", as well as in the United States and Canada. Under normal
circumstances, the Fund will invest at least 65% of its total assets in such
securities. The Adviser defines the "Greater Asia Region" to include China, Hong
Kong, India, Indonesia, Japan, Malaysia, Pakistan, The Philippines, Singapore,
South Korea, Taiwan and Thailand. The Fund will focus on both American (U.S. and
Canada) and Asian companies that are expected to benefit from the development
and growth of the economies of the countries located in the "Greater Asia
Region".
In addition, the Adviser has established guidelines that allow it to give
priority to investing in companies that, in its opinion, show an effective
employment of Asian American talent in management, science or technology. The
Fund is designed for long-term investors and not as a trading vehicle, and is
not intended to present a complete investment program.
See "Investment Objective and Policies".
The Adviser has also established certain guidelines which currently prohibit
the Fund from investing in companies that supply products or services that are
harmful to humans or engage in labor practices that violate human rights. See
"Investment Objective and Policies".
The Fund is a separate series of SAGE/TSO Trust (the "Trust"), an open-end,
diversified management investment company commonly known as a mutual fund.
SAGE/TSO Investment Management L.P. (the "Adviser") serves as the investment
adviser of the Fund managing its assets in accordance with its investment
objectives.
The Fund offers its shares through two separate classes of shares: Class A
Shares and Class D Shares. Both classes of shares are identical except as to the
expenses borne by each class. These alternative classes permit investors to
choose the method of purchasing shares most beneficial to them.
This Prospectus sets forth concisely the information regarding the Fund that
an investor should know before investing in the Fund. Investors should read this
Prospectus and retain it for future reference. A Statement of Additional
Information dated January 1, 1998, which may be revised from time to time,
provides a further discussion of certain areas which may be of interest to some
investors. It has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. To request a copy please call (888) BUY-GROW
or (888) 289-4769 (foreign investors may call (703) 847-6792).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
PAGE
Prospectus Summary...................................
Expense Summary......................................
Financial Highlights.................................
The Trust and the Fund...............................
Investment Objective and Policies....................
Risk Factors.........................................
Management of the Fund...............................
The Distribution Plans...............................
How to Purchase Shares...............................
Purchase of Class D Shares...........................
Purchase of Class A Shares...........................
How to Redeem Shares.................................
Shareholder Services.................................
Net Asset Value......................................
Dividends and Taxes..................................
Performance Information..............................
General Information..................................
Description of Permitted Investments and Risk
Factors..............................................
Underwriter: Adviser:
ADS Distributors, Inc. SAGE/TSO Investment Management L.P.
101 Main Street Suite E 7799 Leesburg Pike, Suite 900
Safety Harbor, Florida 34695 Falls Church, Virginia 22043
(888) BUY-GROW (888) AAA-JTSO
(813) 725-8711 (703) 847-6792
THIS PROSPECTUS IS NOT AN OFFERING OF THE SECURITIES HEREIN DESCRIBED IN ANY
JURISDICTION OR TO ANY PERSON TO WHOM IT IS UNLAWFUL FOR THE FUND TO
MAKE SUCH AN OFFER OR SOLICITATION. NO SALES REPRESENTATIVE,
DEALER, OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION
OR MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS.
<PAGE>
PROSPECTUS SUMMARY
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
America Asia Allocation Growth Fund (the "Fund") seeks to achieve long-term
capital growth. There can be no assurance that the Fund will be able to achieve
its investment objective. See "Investment Objective and Policies".
WHAT ARE THE PERMITTED INVESTMENTS?
The Fund intends to invest substantially all its assets in equity securities
of companies located in the "Greater Asia Region", as well as in the United
States and Canada. The Adviser defines the "Greater Asia Region" to include
China, Hong Kong, India, Indonesia, Japan, Malaysia, Pakistan, The Philippines,
Singapore, South Korea, Taiwan and Thailand. The Fund will focus on both
American and Asian companies that are expected to benefit from the development
and growth of the economies of the countries located in the "Greater Asia
Region". In addition, any company in which the Fund invests must, in the opinion
of the Adviser, conduct business in accordance with the stated philosophy of the
Fund. The Fund initially intends to invest most of its assets in common stocks
and sponsored or unsponsored American Depository Receipts. See "Investment
Objective and Policies" and "Description of Permitted Investments and Risk
Factors".
WHAT IS THE STATED PHILOSOPHY OF THE FUND?
In addition to the fundamental investment objective of the Fund, the Adviser
has established certain guidelines which currently prohibit the Fund from
investing in companies that supply products or services that are harmful to
humans or engage in labor practices that violate human rights. See "Investment
Objective and Policies".
WHAT PRIORITY INVESTMENT MAY THE FUND MAKE?
The Adviser may give priority to investments in companies that meet its
investment criteria and which demonstrate an effective employment of Asian
American talent in management, science or technology. See "Investment Objective
and Policies".
WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE FUND?
The investment policies of the Fund have certain risks and considerations of
which investors should be aware. The Fund invests in securities that fluctuate
in value, and investors should expect the Fund's net asset value per share to
fluctuate. Investing in the equity securities of foreign companies involves
special risks and considerations not typically associated with investing in the
equity securities of U.S. companies. The securities markets in the Greater Asia
Region (with the exception of Japan) and other emerging markets are
substantially smaller, less liquid and more volatile than the major securities
markets in the United States. There may be different accounting standards,
differences in securities regulation, higher brokerage costs, currency exchange
rate fluctuations and conversion costs, and less publicly available information
about foreign companies and securities issued thereby. See "Investment Objective
and Policies", "Risk Factors" and "Description of Permitted Investments and Risk
Factors".
WHO IS THE INVESTMENT ADVISER?
SAGE/TSO Investment Management L.P. serves as the investment adviser of the
Fund. See "Expense Summary" and "Management of the Fund".
WHO IS THE ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTING AGENT?
American Data Services, Inc. serves as the administrator, transfer agent and
fund accounting agent for the Fund. See "Management of the Fund".
<PAGE>
WHO IS THE DISTRIBUTOR?
ADS Distributors , Inc. serves as the distributor of the Fund's shares. See
"Management of the Fund".
3
<PAGE>
IS THERE A SALES LOAD?
Purchases of Class A Shares are subject to a maximum sales charge of 5.00%.
Class D Shares are not subject to a sales charge. Both classes of shares are
subject to annual 12b-1 Plan expenses. See "The Distribution Plans" and "How to
Purchase Shares".
IS THERE A MINIMUM INVESTMENT?
The minimum initial investment for Class A Shares is $5,000 ($2,000 for IRA
and SEP accounts) and $200 for subsequent investments. The minimum initial
investment for Class D Shares is $10,000 ($2,000 for IRA and SEP accounts) and
$200 for subsequent investments.
HOW DO I PURCHASE SHARES?
Class D Shares are offered at net asset value per share to registered
investment advisers on behalf of their clients. Class A Shares are offered at
the net asset value per share plus a maximum initial sales charge of 5.00% of
the offering price. See "How to Purchase Shares".
HOW DO I REDEEM SHARES?
Shares of the Fund may be redeemed at the current net asset value per share
next determined after receipt by the transfer agent of a redemption request in
proper form. Signature guarantees may be required for certain redemption
requests. See "How to Redeem Shares".
HOW ARE DISTRIBUTIONS PAID?
Substantially all of the net investment income (exclusive of capital gains)
of the Fund is distributed in the form of annual dividends. If any capital gains
are realized, substantially all of them will be distributed by the Fund at least
annually. All dividends and distributions are paid in additional shares (without
sales charge) unless payment in cash is requested. See "Dividends and Taxes".
EXPENSE SUMMARY
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Class A Class D
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Shareholder Transaction Expenses:
Maximum sales charge imposed on purchases (as a percentage of offering
price) ................................................................. 5.00%(1) None
Maximum sales charge imposed on reinvested dividends (as a percentage of
offering price) ........................................................ None None
Deferred sales charge (as a percentage of original purchase price) ...... None None
Redemption fees (as a percentage of amount redeemed)(2) ................. None None
</TABLE>
(1) Reduced for purchases of $100,000 and over. See "How to Purchase
Shares".
(2) If you want to redeem shares by wire transfer, the Fund's transfer
agent charges a fee (currently $9.00) for each wire redemption.
Purchases and redemptions may also be made through broker-dealers and
others who may charge a commission or other transaction fee for their
services.
<PAGE>
Class A CLass D
---------- ----------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Advisory Fees (after fee waivers)(3) ................ 0.00% 0.00%
12b-1 Fees .......................................... 0.35% 0.35%
Other Expenses ................................... 2.40% 2.40%
---------- ----------
Total Fund Operating Expenses (after fee waivers)(3) 2.75% 2.75%
========== ==========
4
<PAGE>
(3) The Adviser has, on a voluntary basis, agreed to waive all or a portion
of its fees and to reimburse certain expenses so that the Fund's total
operating expenses will not exceed 2.75% of the Fund's average daily
net assets. The Adviser reserves the right to terminate this waiver or
any reimbursement at any time, in its sole discretion. Absent such
waivers, advisory fees for the Fund would be 2.00% and total operating
expenses for the fiscal year ended September 30, 1997 would have been
17.04 of the Fund's average daily net assets.
EXAMPLE
Based on the level of expenses listed above, and (i) imposition of the
maximum sales charge for Class A Shares, (ii) 5% annual return and (iii)
redemption at the end of each time period, the total expenses relating to an
investment of $1,000 would be as follows:
Class A Class D
1 Year ........... $ 76 $28
3 Years .......... $131 $85
5 Years .......... $188 $145
10 Years ......... $343 $308
The foregoing example should not be considered a representation of past or
future expenses. Actual expenses may be more or less than those shown. The
purpose of the expense tables and example is to assist the investor in
understanding the various costs and expenses that may be directly or indirectly
borne by shareholders of the Fund. Additional information may be found under
"Management of the Fund". The rules of the Securities and Exchange Commission
require that the maximum sales charge be reflected in the above table with
respect to Class A Shares. However, certain investors may qualify for a reduced
sales charge. See "How to Purchase Shares".
Long-term holders of Class A Shares may eventually pay more than the economic
equivalent of the maximum front-end sales charges otherwise permitted by the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
(the "NASD").
<PAGE>
FINANCIAL HIGHLIGHTS
The following sets forth information for American Asia Allocation Growth Fund of
Sage/Tso Trust for the year ended September 30, 1997, which have been audited by
Price Waterhouse LLP, independent accountants, whose unqualified report on the
September 30, 1997 financial statements appears in the Fund's Annual Report to
Shareholders. This information should be read in conjunction with the financial
statements and accompanying notes appearing in the 1997 Annual Report to
Shareholders which are incorporated by reference into the Statement of
Additional Information.
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<PAGE>
FINANCIAL HIGHLIGHTS
The following sets forth information for American Asia Allocation Growth Fund of
Sage/Tso Trust for the year ended September 30, 1997, which have been derived
from the Financial Statements audited by Price Waterhouse LLP, independent
accountants, whose unqualified report on the September 30, 1997 financial
statements appears in the Fund's Annual Report to Shareholders. This information
should be read in conjunction with the financial statements and accompanying
notes appearing in the 1997 Annual Report to Shareholders which are incorporated
by reference into the Statement of Additional Information.
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Class A Shares Class D Shares
For the Period For the Period
December 18, 1996 October 2, 1996
through through
September 30, 1997* September 30, 1997*
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Net Asset Value, Beginning of Period............................ $ 4.75 $ 5.00
Income from Investment Operations:
Net investment loss.................................... (0.05) (0.05)
Net gains on securities
(both realized and unrealized)....................... 0.35 0.10
----------- ------------
Total from investment operations..................... 0.30 0.05
----------- ------------
Net Asset Value, End of Period.................................. $ 5.05 $ 5.05
=========== =============
Total Return^................................................... 6.32%(1) 1.00%(1)
Ratios/Supplemental Data
Net assets, end of period (in 000s).................... $ 352 $ 1,690
Ratio of expenses to average net assets:
Before expense reimbursement....................... $ 17.04%(2) $ 17.04%(2)
After expense reimbursement........................ 2.75% 2.75%(2)
Ratio of net investment income to average net assets:
Before expense reimbursement....................... (15.66%)(2) (15.66%)(2)
After expense reimbursement........................ (1.37%)(2) (1.37%)(2)
Portfolio turnover rate................................ 130.23%(1) 130.23%(1)
Average commission rate paid........................... $ 0.0414 0.0414
* Commencement of investment operations.
^ Class A total return calculation does not reflect sales load.
1 Not Annualized.
2 Annualized.
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<PAGE>
THE TRUST AND THE FUND
SAGE/TSO Trust (the "Trust") is an open-end, diversified management
investment company organized as a business trust under the laws of the State of
Delaware. The Trust is organized to offer separate series of shares and is
currently comprised of one series called America Asia Allocation Growth Fund
(the "Fund"). The Fund currently offers two separate classes of shares and
additional classes of shares may be added without shareholder approval. Class A
Shares and Class D Shares differ with respect to sales charges and minimum
initial investment. Except for these differences, each share of the Fund
represents an undivided proportionate interest in the Fund.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is long-term capital growth. This
objective is fundamental and may not be changed without a vote of the holders of
the majority of the outstanding voting securities of the Fund. The Fund's
investment policies described below are not fundamental and may be changed
without shareholder approval. Additional investment policies and restrictions
are described in the Statement of Additional Information.
The Fund seeks maximum long-term capital growth by investing in the equity
securities of companies located in the "Greater Asia Region", as well as in the
United States and Canada. Under normal circumstances, the Fund will invest at
least 65% of its total assets in such securities. The Adviser defines the
"Greater Asia Region" to include China, Hong Kong, India, Indonesia, Japan,
Malaysia, Pakistan, The Philippines, Singapore, South Korea, Taiwan and
Thailand. The Fund will focus on both American (United States and Canada) and
Asian companies
5
<PAGE>
that are expected to benefit from the development and growth of the economies of
the countries located in the "Greater Asia Region". The countries constituting
the Greater Asia Region may be changed by the Board of Trustees without
shareholder approval.
In addition, among the companies that meet the Adviser's investment criteria,
the Adviser has established guidelines that allow it to give priority to
investing in companies that, in its opinion, show an effective employment of
Asian American talent in management, science or technology. Among the companies
that meet the Adviser's investment criteria, the Adviser may give priority to
those that, in the Adviser's opinion, employ the talents of Asian Americans in
an effective manner. For example, these companies may have been founded or may
be managed by Asian Americans, or may utilize Asian Americans in important roles
in the research and development of scientific or technological advances. The
Board of Trustees may, from time to time, amend these priorities without
shareholder approval.
The Adviser also employs a specific philosophy in implementing the investment
objective of the Fund pursuant to certain guidelines established by the Adviser.
These guidelines prohibit the Fund from investing in companies that: (1) Supply
products or services that are harmful to humans. For example, the Fund will not
invest in companies that produce tobacco products, or (2) Engage in labor
practices that violate human rights. For example, the Fund will not invest in
companies that employ child labor. The Board of Trustees may, from time to time,
amend these guidelines without shareholder approval.
Equity securities include common and preferred stocks, convertible
securities, rights and warrants to purchase common stocks and sponsored and
unsponsored American Depository Receipts ("ADRs"), European Depository Receipts
("EDRs"), or Global Depository Receipts ("GDRs")(collectively "Depository
Receipts"). Initially, the Fund intends to invest primarily in Depository
Receipts or other similar securities representing an interest in securities of
foreign issuers rather than directly in the stock of those companies. The Fund
also intends to initially limit its purchase of non-U.S. stocks to those that
may be purchased on U.S. stock markets.
The Fund may also invest up to 35% of its total assets in other equity
securities, U.S. government securities, short-term money market instruments
(such as U.S. Treasury bills, commercial paper, certificates of deposit and
bankers' acceptances) and repurchase agreements. Debt securities convertible
into common stocks will be investment grade or, if unrated, will be of
comparable quality as determined by the Adviser under the supervision of the
Board of Trustees. See "Description of Permitted Investments and Risk Factors".
The Fund will not limit its investments to any particular type of company.
The Fund may invest in companies, large or small, whose earnings are believed to
be in a relatively strong growth trend, or in companies in which significant
further growth is not anticipated and whose market value per share is thought to
be undervalued. The Fund may invest in small relatively less well-known
companies. These companies may present greater opportunities for capital
appreciation, but may also involve greater risk. See "Risk Factors".
The Adviser will consider an issuer of securities to be located in the
Greater Asia Region, United States or Canada to be those: (i) which are
organized under the laws of a country in those regions; (ii) which derive at
least 50% of its revenues or profits from goods produced or sold, investments
made, or services performed in these regions or which have at least 50% of their
assets situated in these regions; or (iii) for which the principal securities
trading markets (including ADR's) are in these regions. The Adviser will
determine if a company meets any one of the above criteria through fundamental
research, review of existing public data on such companies, and through personal
interviews and visits to such companies.
There is no requirement that the Fund, at any given time, invest in any one
particular country or in all of the countries listed above or in any other Asian
countries. The Fund has no set policy for allocating investments between
American and Asian companies, nor among the various countries in the Greater
Asia Region. Allocation of investments among the various countries will depend
on the relative attractiveness of the stocks of issuers in the respective
countries. Government regulation and restrictions in many of the
<PAGE>
countries of interest may limit the amount, mode and extent of investment in
companies in such countries.
The Fund may engage in foreign currency exchange contracts to protect the
value of its assets against future changes in the level of currency exchange
rates. Although the Fund has no present intentions to engage in transactions
involving the use of options and futures contracts, the Fund may engage in such
transactions for purposes of
6
<PAGE>
increasing its investment return or hedging against market changes. The Fund may
also buy and sell stock index futures contracts for hedging purposes. Such
instruments are generally considered to be derivative securities. The total of
all instruments deemed derivative in nature by the Adviser will generally not
exceed 20% of total assets of the Fund. See "Risk Factors" and "Description of
Permitted Investments and Risk Factors".
For temporary defensive purposes, the Fund may invest up to 100% of its total
assets in short-term U.S. investments, such as cash or cash equivalents,
commercial paper, short-term bank obligations, government and agency securities,
and repurchase agreements. To the extent that the Fund is invested in temporary
defensive instruments, it will not be pursuing its investment objective. See
"Description of Permitted Investments and Risk Factors" and the Statement of
Additional Information.
Although the Fund cannot accurately predict its portfolio turnover rate,
under normal circumstances the portfolio turnover rate is not expected to exceed
100% per year. A portfolio turnover rate in excess of 100% may result in higher
transaction costs to the Fund and may increase the amount of taxes payable by
the Fund's shareholders. The Fund's portfolio turnover rate for the period ended
September 30, 1997 was 130%
For a further discussion of the Fund's permitted investments, see
"Description of Permitted Investments and Risk Factors" and the Statement of
Additional Information.
INVESTMENT PROCESS
The Adviser employs a "top-down" assessment approach of countries, regions
and economies and a "bottom up" assessment approach of stocks within selected
sectors. The Adviser's approach in selecting investments for the Fund is value
driven. The best growth companies in both America and Asia will be considered
for investment by applying sound fundamental and technical analysis. The best
Asian American companies will also be considered for investment by the Adviser.
The Adviser considers some of the best growth companies to be those with
promising profit synergies, particularly those in America and Asia that have
mutually beneficial business connections.
RISK FACTORS
Investments in securities of the Greater Asia Region may be subject to
certain risks not typically associated with securities of U.S. issuers. Because
of its emphasis on the Greater Asia Region, the Fund should be considered as a
vehicle for diversification of investments and not as a balanced investment
program. See "Description of Permitted Investments and Risk Factors". Although
the Adviser has not previously provided investment advisory services to
registered investment companies, the Adviser has been engaged in the investment
advisory business and providing investment advice to individuals, trusts and
retirement plans since 1992.
GREATER ASIA REGION'S ECONOMY
In the past five years, the newly emerging securities markets in the Greater
Asia Region have had strong economic growth which has been reflected in stronger
market returns than those of Western Europe and the United States on average and
have demonstrated significant growth in market capitalization, in numbers of
listed securities and in volume of transactions. Over this same period, the
underlying economies of the region have grown against a background of high
savings rates and generally moderate inflation. There can be no assurance that
this strong economic growth will continue over the long term. Please see the
Statement of Additional Information under the Subheading "The Greater Asia
Region" for a more detailed discussion.
GREATER ASIA REGION OPPORTUNITY
The Adviser believes that in contrast to more developed economies, the newly
industrialized countries of the Greater Asian Region are in an earlier, more
dynamic growth state of their development. This growth has been characterized
by, among other factors, low labor costs, strong demand from export markets for
consumer products, high
<PAGE>
productivity, long work weeks, pro-business governments and a strong work ethic.
Historically, South Korea, Hong Kong, Singapore and Taiwan have been examples of
these traits. Today, however, the economies of Malaysia, Indonesia, Thailand,
India, Australia, New Zealand, China and others are starting to exhibit many of
these same characteristics and appear to be accelerating.
7
<PAGE>
The Adviser acknowledges the existence of potential political uncertainty in
Asia that may impact on the liquidity and value of certain portfolio
investments. Currently, the Adviser is monitoring jurisdictional disputes
between the People's Republic of China and the Republic of China and between
South Korea and North Korea. The Adviser is also monitoring events in Hong Kong.
Hong Kong is a British colony which transferred sovereignty to the Peoples
Republic of China in 1997. There can be no guarantee that property rights will
continue to be safeguarded in Hong Kong after 1997, although recently China has
moved toward free enterprise and has established stock exchanges of its own.
The Adviser believes that these uncertainties, as of the date of this
prospectus, will not have a long-term negative impact on the value of an
investment in the Fund. The Adviser further believes that vigilant monitoring of
events in the Greater Asia Region may mitigate a temporary period of
instability.
Many of the stock markets of the Greater Asia Region are either fully open
for foreign investors or are in the process of opening. The Adviser believes
that the opening of these markets offers particular opportunities for
investment.
FOREIGN SECURITIES
Investing in foreign securities generally involves somewhat different
investment risks from those affecting securities of U.S. issuers. There may be
limited publicly available information with respect to foreign issuers, and
foreign issuers are not generally subject to uniform accounting, auditing, and
financial and other reporting standards and requirements comparable to those
applicable to domestic companies. Therefore, disclosure of certain material
information may not be made and less information may be available to investors
investing in foreign companies than in the U.S. There may also be less
government supervision and regulation of foreign securities exchanges, brokers
and listed companies than in the U.S. Many foreign securities markets have
substantially less volume than U.S. national securities exchanges, and
securities of some foreign issuers are less liquid and subject to greater price
volatility. Brokerage commissions and other transaction costs on foreign
securities exchanges are generally higher than in the U.S. Dividends and
interest paid by foreign issuers may be subject to withholding and other foreign
taxes, which may decrease the net return on foreign investments. Additional
risks include future adverse political and economic developments, the
possibility that a foreign jurisdiction might impose or change withholding
taxes, possible seizure, nationalization or expropriation of the foreign issuer,
and the possible adoption of restrictions and exchange controls. Certain costs
attributable to foreign investing, such as custody charges, are higher than
those attributable to domestic investing.
SMALLER COMPANIES
The Fund may invest in securities of all types of issuers, large or small,
whose earnings are believed by the Adviser to be in a relatively strong growth
trend or whose assets are substantially undervalued. Smaller companies often
have limited product lines, markets or financial resources, or may depend on a
limited management group. The securities of such companies may trade less
frequently and in limited volume, and only in the over-the-counter market or on
a regional securities exchange. As a result, these securities may fluctuate in
value more than those of larger, more established companies.
EMERGING MARKETS
The risks of investing in foreign markets generally may be intensified in the
case of investments in emerging markets or countries with limited or developing
capital markets. Investing in securities of issuers in the Greater Asia Region
involves special risks. The Fund's investment focus in that region makes the
Fund particularly subject to political, social, or economic conditions
experienced in that region. Many of the countries in the Greater Asia Region
constitute "developing" or "emerging" economies and markets. Risks of investing
in such markets include: (i) less social, political, and economic stability;
(ii) smaller securities markets and lower trading volume, which may result in a
lack of
<PAGE>
liquidity and in greater price volatility; (iii) certain national policies that
may restrict the Fund's investment opportunities, including restrictions on
investments in issuers or industries deemed sensitive to national
8
<PAGE>
interests, or expropriation or confiscation of assets or property, which could
result in a Fund's loss of its entire investment in that market; and (iv) less
developed legal structures governing private or foreign investment or allowing
for judicial redress for injury to private property.
The economies of many of the countries in which the Fund may invest may
differ favorably or unfavorably from the U.S. economy in such respects as growth
of gross domestic product, rates of inflation, currency depreciation, capital
reinvestment, resource self-sufficiency, and balance of payments positions.
Economies in emerging markets generally are heavily dependent upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values, and other protectionist measures negotiated or imposed by the countries
with which they trade.
The securities markets in the Greater Asia Region (with the exception of
Japan) are substantially smaller, less liquid and more volatile than the major
securities markets in the United States. A high proportion of the shares of many
issuers may be held by a limited number of persons and financial institutions. A
limited number of issuers may represent a disproportionately large percentage of
market capitalization and trading value and the securities markets are
susceptible to being influenced by larg7e investors trading significant blocks
of securities.
RISK FACTORS ON DERIVATIVE INSTRUMENTS
OPTIONS AND FUTURES TRANSACTIONS
The use of futures and related options involves certain special risks.
Futures and options transactions involve costs and may result in losses. Certain
risks arise because of the possibility of imperfect correlations between
movements in the prices of index futures and options and movements in the prices
of the underlying stock index or of the securities in the Fund's portfolio that
are the subject of a hedge. Similarly, there may be imperfect correlations
between movements in the prices of foreign currency futures contracts and
options and movements in the prices of the underlying currency. The successful
use of options and futures further depends on the Adviser's ability to forecast
market movements correctly. Other risks arise from the Fund's potential
inability to close out its futures or options positions, and there can be no
assurance that a liquid secondary market will exist for any future or option at
any particular time. The Fund generally expects that its options and futures
transactions will be conducted on recognized exchanges. In certain instances,
however, the Fund may purchase and sell options in the over-the-counter markets.
The Fund's ability to terminate options in the over-the-counter markets may be
more limited than for exchange-traded options and may also involve the risk that
securities dealers participating in such transactions would be unable to meet
their obligations to the Fund. See "Hedging and Derivatives" in the Statement of
Additional Information for a more detailed description.
FORWARD FOREIGN CURRENCY CONTRACTS, CURRENCY OPTIONS AND CURRENCY FUTURES
CONTRACTS
In order to hedge against possible changes in the exchange rates of foreign
currencies in relation to the U.S. dollar, the Fund may enter into forward
currency exchange contracts and use options on foreign currencies, but only for
the purpose of hedging. Forward foreign currency contracts involve obligations
to purchase or sell a specified currency at a future date, which may be any
fixed number of days from the date of the contract agreed upon by the parties,
at a price set at the time of the contract. The Fund may enter into forward
contracts to sell foreign currency provided that no more than 15% of the Fund's
total assets would be required to purchase offsetting contracts. There is the
risk that movements in the price of the hedging instrument will not correlate
perfectly with movements in the price of the currency being hedged.
CURRENCY FACTORS
In the event that the Fund invests a significant portion of its assets in
foreign securities directly, the Fund's investment performance could be
significantly affected by
<PAGE>
changes in foreign currency exchange rates. The value of the Fund's assets
denominated in foreign currencies would increase or decrease in response to
fluctuations in the value of these foreign currencies relative to the U.S.
dollar. Currency exchange rates can be volatile at times in response to supply
and demand in the currency exchange markets, international balances of payments,
governmental intervention, speculation and other political and economic
conditions.
9
<PAGE>
MANAGEMENT OF THE FUND
THE BOARD OF TRUSTEES
The Trust has a Board of Trustees that establishes the Fund's policies and
supervises and reviews the management of the Fund. The day-to-day operations of
the Fund are administered by the officers of the Trust and by the Adviser
pursuant to the terms of the Investment Advisory Agreement with the Fund. The
Trustees review the various services provided by the Adviser to ensure that the
Fund's general investment policies and programs are being properly carried out
and that administrative services are being provided to the Fund in a
satisfactory manner. Information pertaining to the Trustees and executive
officers is set forth in the Statement of Additional Information.
THE INVESTMENT ADVISER
SAGE/TSO Investment Management L.P. serves as the Fund's investment adviser
and manager, and is an investment adviser registered as such under the
Investment Advisers Act of 1940, as amended. The Adviser is a successor to
Strategic Investment Advisors, an SEC registered investment advisory firm owned
solely by James C. Tso. Since 1992, Mr. Tso has provided investment advisory
services to individuals and institutional clients and currently manages $10
million in assets. Mr. Tso serves as President and Chief Investment Officer of
the Fund. The principal business address of the Adviser is 7799 Leesburg Pike,
Suite 900, Falls Church, Virginia 22043.
As the Fund's investment adviser, the Adviser makes the investment decisions
concerning the assets of the Fund and continuously reviews, supervises and
administers the Fund's investment programs, subject to the supervision of, and
policies established by the Trustees of the Fund.
For providing investment advisory services, the Fund pays the Adviser a
monthly fee which is calculated daily by applying an annual rate of 2.00% of the
average daily net assets of the Fund. The investment advisory fee is higher than
that paid by most investment companies, although the Adviser believes the fee to
be comparable to that paid by investment companies with similar investment
objectives and policies. From time to time, the Adviser may voluntarily waive
all or a portion of its management fee and/or absorb certain expenses of the
Fund without further notification of the commencement or termination of any such
waiver or absorption. Any such waiver or absorption will have the effect of
lowering the overall expense ratio of the Fund and increasing the Fund's overall
return to investors at the time any such amounts are waived and/or absorbed. The
Adviser has voluntarily agreed to waive all or a portion of its fee, and/or to
reimburse expenses of the Fund to the extent necessary in order to limit net
operating expenses to an annual rate of not more than 2.75% of the Fund's
average daily net assets. The Adviser reserves the right to terminate its
voluntary fee waiver and reimbursement at any time, in its sole discretion. Any
reductions in its fee that are made by the Adviser are subject to reimbursement
by the Fund within the following three years, provided that the Fund is able to
effect such reimbursement and remain in compliance with applicable expense
limitations. Any such management fee reimbursement will be accounted for on the
financial statements of the Fund as a contingent liability of the Fund and it
will appear as a footnote to the Fund's financial statements until such time as
it appears that the Fund will be able to effect such reimbursement. At such time
as it appears probable that the Fund is able to effect such reimbursement, the
amount of reimbursement that the Fund is able to effect will be accrued as an
expense of the Fund for that current period.
PORTFOLIO MANAGEMENT
James C. Tso, Chief Investment Officer, is primarily responsible for the
day-to-day management of the Fund's investment portfolio. Since 1992 Mr. Tso has
managed investment portfolios for clients and developed model portfolios
consistent with the investment objectives of the Fund. Mr. Tso's thirty years of
experience includes mergers and acquisitions and international banking and
marketing investments. In addition, Mr. Tso has provided financial and estate
planning to clients. He has a B.A. in Finance from New York University, an M.A.
from Occidental College, and a J.D. from George Mason University. Since 1975,
Mr. Tso has held leadership positions with various local and national Asian
American organizations.
Marcel Thevoz serves as Chief Portfolio Strategist for the Fund since the
Fund's
<PAGE>
inception on October 2, 1996. Mr. Thevoz's experience in investments spans more
than 40 years. Most recently, Mr. Thevoz served as Vice President and Chief
Technical Analyst of Voss & Co., Inc., a regional stock brokerage firm located
in Virginia. Mr. Thevoz also served as this firm's Director of Interna-
10
<PAGE>
tional Operations. His early professional work included several years with Brown
Bros., Harriman & Co. and F.S. Smithers & Co. on Wall Street and with A.E. Ames
Investment Co. in Toronto, Canada. He spent a number of years as a portfolio
manager in a Swiss bank, later joining the overseas office of a well-known Wall
Street firm in Geneva, Switzerland as head of its institutional accounts area.
Mr. Thevoz received his MBA in economics from the University of Lausanne,
Switzerland and is an active member of the Society of Market Technicians of
Washington.
THE UNDERWRITER AND DISTRIBUTOR
ADS Distributors, Inc., 101 Main Street, Suite E, Safety Harbor, Florida
34695, was engaged pursuant to an agreement for the limited purpose of acting as
underwriter to facilitate the registration of shares of the Fund under state
securities laws and to assist in the sale of shares.
THE ADMINISTRATOR
American Data Services, Inc. ("ADS"), which has its principal business
address at 150 Motor Parkway, Suite 109, Happauge, New York 11788, serves as
administrator of the Fund pursuant to an Administrative Services Agreement.
Under the agreement, ADS receives an annual fee of $18,000 or 0.12% of the
average daily net assets of the Fund, whichever is greater. The services that
ADS provides to the Fund include: coordinating and monitoring of any third
parties furnishing services to the Fund; providing the necessary office space,
equipment and personnel to perform administrative and clerical functions for the
Fund; preparing, filing and distributing proxy materials, periodic reports to
shareholders, registration statements and other documents; and responding to
shareholder inquiries.
THE CUSTODIAN, TRANSFER AGENT AND FUND ACCOUNTING/PRICING AGENT
Star Bank, 435 Walnut Street, Cincinnati, Ohio 45202 is custodian for the
securities and cash of the Fund.
ADS serves as the Fund's transfer agent. As a transfer agent, it maintains
the records of each shareholder's account, answers shareholder inquiries
concerning accounts, processes purchases and redemptions of the Fund's shares,
acts as dividend and distribution disbursing agent and performs other
shareholder service functions. Shareholder inquiries should be addressed to the
transfer agent at (888) BUY-GROW or (888) 289-4769 (foreign investors may call
(703) 847-6792).
ADS also performs certain accounting and pricing services for the Fund,
including the daily calculation of the Fund's net asset value per share.
FUND EXPENSES
Each class of shares of the Fund will bear, pro rata, all of the common
expenses of the Fund. Such expenses may include, but are not limited to ;
management fees; legal expenses; audit fees; printing costs (e.g. costs of
printing annual reports, semi-annual reports and prospectuses which are
distributed to existing shareholders); brokerage commissions; the expenses of
registering and qualifying shares of the Fund for sale with the Securities and
Exchange Commission and with various state securities commissions; expenses of
the organization of the Fund; transfer agent, custodian and administrator fees;
the expenses of obtaining quotations of portfolio securities and pricing the
Fund's shares; trade association dues; all costs associated with shareholder
meetings and the preparation and dissemination of proxy materials; costs of
liability insurance and fidelity bonds; fees for Trustees who are not officers,
directors or employees of the Adviser; and any extraordinary and nonrecurring
expenses which are not expressly assumed by the Adviser. Due to the specific
distribution expenses and other costs that will be allocable to each class, the
net asset value of and dividends paid to each class of the Fund will vary.
THE DISTRIBUTION PLANS
The Board of Trustees of the Fund has adopted separate distribution plans for
each class of shares pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended
<PAGE>
(collectively the "Distribution Plans", or individually a "Plan"). As provided
in each Plan, each class of shares will pay an annual fee up to 0.35% of the
respective classes' average
11
<PAGE>
daily net assets to ADS Distributors, Inc. ("ADS Distributors"), the Fund's
distributor, as compensation for its services. From this amount, ADS
Distributors may make payments to financial institutions and intermediaries such
as banks, savings and loan associations, insurance companies, investment
counselors, and broker-dealers who assist in the distribution of the respective
class of shares of the Fund or provide services with respect to both classes of
shares of the Fund, pursuant to service agreements with the Fund. In addition,
payments will be made to the Fund's Adviser. Each Plan is characterized as a
compensation plan because the distribution fee will be paid to ADS Distributors
as distributor without regard to the distribution or shareholder service
expenses incurred by ADS Distributors or the amount of payments made to
financial institutions and intermediaries. The Fund intends to operate the
Distribution Plans, in accordance with its terms and within NASD rules
concerning sales charges.
The Fund may also execute brokerage or other agency transactions through an
affiliate of the Adviser or through ADS Distributors for which the affiliate or
ADS Distributors may receive "usual and customary" compensation. The Adviser
will use its best efforts to obtain the best available price and most favorable
execution with respect to all transactions of the Fund. However, subject to
policies established by the Board of Trustees, the Fund may pay a broker-dealer
a commission for effecting a portfolio transaction for the Fund in excess of the
amount of commission another broker-dealer would have charged if the Adviser
determines in good faith that the commission paid was reasonable in relation to
the brokerage or research services provided by such broker-dealer. In selecting
and monitoring broker-dealers and negotiating commissions, consideration will be
given to a broker-dealer's reliability, the quality of its execution services on
a continuing basis and its financial condition.
The fees paid to ADS Distributors under the Distribution Plans are subject to
the review and approval by the Trust's unaffiliated trustees who may reduce the
fees or terminate the Distribution Plans at any time. All such payments made
pursuant to the Distribution Plans shall be made for the purpose of selling
shares issued by each respective class of shares. The distribution fee of one
class will not be used to subsidize the sale of the other class of shares.
HOW TO PURCHASE SHARES
GENERAL
The Fund offers two classes of shares to the general public on a
continuous basis through the Fund's distributor, ADS Distributors, Inc. , either
by mail or by telephone. Class A Shares are sold with an initial sales charge;
Class D Shares are sold without an initial sales charge. Both classes of shares
are subject to annual distribution expenses pursuant to Rule 12b-1. See "The
Distribution Plans". Shares of the Fund are offered only to residents of states
in which the shares are eligible for purchase.
Purchase orders for shares of the Fund that are received by American Data
Services, Inc. ("ADS"), in proper form by the close of regular trading on the
New York Stock Exchange ("NYSE")(currently 4:00 p.m. Eastern time), on any day
that the NYSE is open for trading, will be purchased at the Fund's next
determined public offering price. Orders for Fund shares received after 4:00
p.m. Eastern time will be purchased at the public offering price determined on
the following business day. When market conditions are extremely busy, it is
possible that investors may experience difficulties placing orders by telephone,
and investors may wish to place orders by mail.
The Fund reserves the right to reject any purchase order and to suspend the
offering of shares of the Fund. The Fund reserves the right to vary the initial
investment minimum and minimums for additional investments at any time. In
addition, the Adviser may waive the minimum initial investment requirement for
any investor.
Shareholders may purchase Class A Shares and Class D Shares of the Fund in
one of the ways explained below.
PURCHASES BY MAIL
Both classes of the Fund may be purchased initially by completing the
application accompanying this Prospectus and mailing it to the transfer agent,
together with a check
<PAGE>
payable to "America Asia Allocation Growth Fund". The check or money order and
application should be mailed to America Asia Allocation Growth Fund c/o American
Data Services, Inc.,PO Box 5536, Happauge, New York 11788-0132 . If this is an
initial purchase for Class A Shares, please send a minimum of $5,000 (or $2,000
for IRA and SEP accounts). If this is an initial purchase for Class D Shares,
please send a minimum of $10,000 (or $2,000 for IRA and SEP accounts).
12
<PAGE>
Subsequent investments in an existing account in the Fund may be made at any
time by sending a check payable to "America Asia Allocation Growth Fund", c/o
American Data Services, Inc., PO Box 5536, Hauppauge, NY 11788-0132. Please
enclose the stub of your account statement, and indicate the amount of the
investment.
PURCHASES BY WIRE TRANSFER
Before making an initial investment by wire, an investor must first telephone
the transfer agent at (888) BUY-GROW or (888) 289-4769 (foreign investors may
call (703) 847-6792) in order to be assigned an account number. The investor's
name, account number, taxpayer identification number or Social Security number
and address must be specified in the wire. In addition, an account application
should be promptly forwarded to: American Data Services, Inc.,PO Box 5536,
Happauge, New York 11788-0132. Shareholders having an account with a commercial
bank that is a member of the Federal Reserve System may purchase shares of the
Fund by requesting their bank to transmit funds by wire to:
Star Bank, N.A. Cinti/Trust
ABA # 0420-0001-3
FBO Attn: "America Asia Allocation Growth Fund"
DDA # 488886177
Shareholder Name and Account Number
Additional investments may be made at any time through the wire procedures
described above, which must include a shareholder's name and account number. The
shareholder's bank may impose a fee for investments by wire. The Fund will not
be responsible for the consequence of delays, including delays in the banking or
Federal Reserve wire systems.
PURCHASES THROUGH BROKER-DEALERS
The Fund may accept telephone orders from brokers, financial institutions or
service organizations which have been previously approved by the Fund. It is the
responsibility of such brokers, financial institutions or service organizations
to promptly forward purchase orders and payments for the same to the Fund.
Shares of the Fund purchased through brokers, financial institutions, service
organizations, banks and bank trust departments, may charge the shareholder a
transaction fee or other fee for its services at the time of purchase.
Wire orders for shares of the Fund received by dealers prior to 4:00 p.m.
Eastern time, and received by ADS before 5:00 p.m. Eastern time on the same day,
are confirmed at that day's public offering price. Orders received by dealers
after 4:00 p.m. Eastern time are confirmed at the public offering price on the
following business day. It is the dealer's obligation to place the order with
ADS before 5:00 p.m. Eastern time.
SUBSEQUENT INVESTMENTS
Once an account has been opened, subsequent purchases may be made by mail,
bank wire, automatic investing or direct deposit. The minimum for subsequent
investments for Class A Shares is $200 for all accounts. The minimum for
subsequent investments for Class D Shares is $200 for all accounts. When making
additional investments by mail, simply return the remittance portion of a
previous confirmation with your investment in the envelope that is provided with
each confirmation statement. Your check should be made payable to "America Asia
Allocation Growth Fund" and mailed to America Asia Allocation Growth Fund c/o
American Data Services, Inc., PO Box 5536, Hauppauge, NY 11788-0132 . Orders to
purchase shares are effective on the day ADS receives your check or money order.
All investments must be made in U.S. dollars, and, to avoid fees and delays,
checks must
<PAGE>
be drawn only on banks located in the United States. A charge (minimum of $20)
will be imposed if any check used for the purchase of shares is returned. The
Fund and ADS each reserve the right to reject any purchase order in whole or in
part.
13
<PAGE>
PURCHASE OF CLASS D SHARES
Class D Shares of the Fund may be purchased by registered investment advisers
on behalf of their clients at the net asset value next determined after receipt
of a purchase order in proper form by the transfer agent. Shares may also be
bought and sold through any securities dealer having a dealer agreement with ADS
Distributors , the Fund's principal underwriter.
The minimum initial investment for Class D Shares is $10,000 ($2,000 for IRA
and SEP accounts) and subsequent purchases must be at least $200.
PURCHASE OF CLASS A SHARES
Class A Shares of the Fund are offered at the public offering price which is
the current net asset value per share next determined after receipt of a
purchase order in proper form by the transfer agent, plus any applicable sales
charge. The sales charge is a variable percentage of the offering price,
depending upon the amount of the sale. No sales charge will be assessed on the
reinvestment of distributions. See "Reduced Sales Charges". Shares may also be
bought and sold through any securities dealer having a dealer agreement with ADS
Distributors , the Fund's principal underwriter.
The minimum initial investment for Class A Shares is $5,000 ($2,000 for IRA
and SEP accounts) and subsequent purchases must be at least $200.
The following table shows the regular sales charge on Class A Shares of the
Fund together with the reallowance paid to dealers and the agency commission
paid to brokers, collectively the "commission":
<TABLE>
<CAPTION>
SALES CHARGE
SALES CHARGE AS REALLOWANCE AND
AS PERCENTAGE BROKERAGE
PERCENTAGE OF OF NET AMOUNT COMMISSION AS PERCENTAGE
CLASS A SHARES AMOUNT TO PURCHASE OFFERING PRICE INVESTED OF OFFERING PRICE
--------------------------------- -------------- -------- -----------------
<S> <C> <C> <C>
Less than $100,000 ...................... 5.00% 5.26% 4.75%
$100,000 or more but less than $200,000 . 4.50% 4.71% 4.25%
$200,000 or more but less than $300,000 . 4.00% 4.17% 3.85%
$300,000 or more but less than $500,000 3.50% 3.63% 3.35%
$500,000 or more but less than
$1,000,000............................... 2.50% 2.56% 2.40%
$1,000,000 and over...................... 1.50% 1.52% 1.45%
</TABLE>
The commissions shown in the table apply to sales through financial
institutions and intermediaries. Under certain circumstances, the Distributor or
a sub-distributor may use its own funds to compensate financial institutions and
intermediaries in amounts that are in addition to the commissions shown above.
The Distributor or a sub-distributor may, from time to time and at its own
expense, provide promotional incentives, in the form of cash or other
compensation, to certain financial institutions and intermediaries whose
registered representatives have sold or are expected to sell significant amounts
of shares of the Fund. Such other compensation may take the form of payments for
travel expenses, including lodging, incurred in connection with trips taken by
qualifying registered representatives to places within or outside of the United
States. Under certain circumstances, commissions up to the amount of the entire
sales charge may be reallowed to certain financial institutions and
intermediaries, who might then be deemed to be "underwriters" under the
Securities Act of 1933, as amended.
REDUCED SALES CHARGES
The sales charge for purchases of Class A Shares of the Fund may be reduced
through Rights of Accumulation or a Letter of Intent. To qualify for a reduced
sales charge, an investor must so notify his or her distributor at the time of
each purchase of shares which qualifies for the reduction.
14
<PAGE>
RIGHTS OF ACCUMULATION
A shareholder may qualify for a reduced sales charge by aggregating the net
asset values of shares requiring the payment of an initial sales charge,
previously purchased and currently owned, with the dollar amount of shares to be
purchased.
LETTER OF INTENT
An investor of Class A Shares may qualify for a reduced sales charge
immediately by signing a non-binding Letter of Intent stating the investor's
intention to invest during the next 13 months a specified amount which, if made
at one time, would qualify for a reduced sales charge. The first investment
cannot be made more than 90 days prior to the date of the Letter of Intent. Any
redemptions made during the 13-month period will be subtracted from the amount
of purchases in determining whether the Letter of Intent has been completed.
During the term of the Letter of Intent, the transfer agent will hold shares
representing 5.00% of the indicated amount in escrow for payment of a higher
sales load if the full amount indicated in the Letter of Intent is not
purchased. The escrowed shares will be released when the full amount indicated
has been purchased. If the full amount indicated is not purchased within the
13-month period, a shareholder's escrowed shares will be redeemed in an amount
equal to the difference in the dollar amount of sales charge actually paid and
the amount of sales charge the shareholder would have had to pay on his or her
aggregate purchases if the total of such purchases had been made at a single
time. It is the shareholder's responsibility to notify the transfer agent at the
time the Letter of Intent is submitted that there are prior purchases that may
apply.
The term "single purchaser" refers to (i) an individual, (ii) an individual
and spouse purchasing shares of the Fund for their own account or for trust or
custodial accounts of their minor children, or (iii) a fiduciary purchasing for
any one trust, estate or fiduciary account, including employee benefit plans
created under Sections 401 and 457 of the Internal Revenue Code of 1986, as
amended, and related plans of the same employer.
HOW TO REDEEM SHARES
Shareholders of both classes of shares may redeem their shares of the Fund
without being subject to a sales charge on any business day that the NYSE is
open for business. Redemptions will be effective at the current net asset value
per share next determined after the receipt by the transfer agent of a
redemption request meeting the requirements described below.
REDEMPTION BY MAIL
Shareholders may redeem their shares by submitting a written request for
redemption to America Asia Allocation Growth Fund c/o American Data Services,
Inc., PO Box 5536, Hauppauge, New York, 11788-0132.
A written request must be in good order which means that it must: (i)
identify the shareholder's account name and account number; (ii) state the
number of shares or dollar amount to be redeemed and (iii) be signed by each
registered owner exactly as the shares are registered. To prevent fraudulent
redemptions, a signature guarantee for the signature of each person in whose
name an account is registered is required for all written redemption requests
exceeding $10,000. A signature guarantee is also required when a redemption
request of any amount is sent to an address other than the address of record. A
guarantee may be obtained from any commercial bank, credit union, member firm of
a national securities exchange, registered securities association, clearing
agency and savings and loan association. A credit union must be authorized to
issue signature guarantees; notary public endorsement will not be accepted.
Signature guarantees will be accepted from any eligible guarantor institution
that participates in a signature guarantee program. The transfer agent may
require additional supporting documents for redemptions made by corporations,
executors, administrators, trustees or guardians and retirement plans.
REDEMPTION BY TELEPHONE
<PAGE>
Shareholders who have so indicated on the application, or have subsequently
arranged in writing to do so, may redeem shares by calling the transfer agent at
(888) BUY-GROW or (888) 289-4769 (foreign investors may call
15
<PAGE>
(703) 847-6792) during normal business hours. In order to arrange for redemption
by wire or telephone after an account has been opened, or to change the bank or
account designated to receive redemption proceeds, a written request with a
signature guarantee must be sent to the transfer agent at the address listed
above, under the caption "Redemption By Mail".
The Fund reserves the right to refuse a wire or telephone redemption if it is
believed advisable to do so. Procedures for redeeming Fund shares by wire or
telephone may be modified or terminated at any time.
During periods of unusual economic or market changes, telephone redemptions
may be difficult to implement. In such event, shareholders should follow the
procedures for redemption by mail.
GENERAL REDEMPTION INFORMATION
A redemption request will not be deemed to be properly received until the
transfer agent receives all required documents in proper form. If you have any
questions with respect to the proper form for redemption requests you should
contact the transfer agent at (888) BUY-GROW or (888) 289-4769 (foreign
investors may call (703) 847-6792).
Redemptions will be processed only on a business day during which the NYSE is
open for business. Redemptions will be effective at the current net asset value
per share next determined after the receipt by the transfer agent of a
redemption request meeting the requirements described above. The Fund normally
sends redemption proceeds on the next business day, but, in any event,
redemption proceeds are sent within seven calendar days of receipt of a
redemption request in proper form. Payment may also be made by wire directly to
any bank previously designated by an investor on his or her new account
application. There is a $9.00 charge for redemptions made by wire to domestic
banks. Wires to foreign or overseas banks may be charged at higher rates. It
should also be noted that banks may impose a fee for wire services. In addition,
there may be fees for redemptions made through brokers, financial institutions
and service organizations.
Except as noted below, redemption requests received in proper form by the
transfer agent prior to the close of regular trading hours on the NYSE on any
business day on which the Fund calculates its net asset value are effective as
of that day. Redemption requests received after the close of the NYSE will be
effected at the net asset value per share determined on the next business day
following receipt. No redemption will be processed until the transfer agent has
received a completed application with respect to the account.
The Fund will satisfy redemption requests for cash to the fullest extent
feasible, as long as such payments would not, in the opinion of the Board of
Trustees, result in the necessity of the Fund to sell assets under
disadvantageous conditions or to the detriment of the remaining shareholders of
the Fund.
Pursuant to the Fund's Trust Instrument, however, payment for shares redeemed
may also be made in kind, or partly in cash and partly in-kind. The Fund has
elected, pursuant to Rule 18f-1 under the 1940 Act to redeem its shares solely
in cash up to the lesser of $250,000 or 1% of the net asset value of the Fund,
during any 90-day period for any one shareholder. Any portfolio securities paid
or distributed in-kind would be in readily marketable securities and valued in
the manner described below. See "Net Asset Value." In the event that an in-kind
distribution is made, a shareholder may incur additional expenses, such as
brokerage commissions, on the sale or other disposition of the securities
received from the Fund. In-kind payments need not constitute a cross-section of
the Fund's portfolio.
The Fund may suspend the right of redemption or postpone the date of payment
for more than seven days during any period when (1) trading on the NYSE is
restricted or the NYSE is closed, other than customary weekend and holiday
closings; (2) the Securities and Exchange Commission has, by order, permitted
such suspension; (3) an emergency, as defined by rules of the Securities and
Exchange Commission, exists making disposal of portfolio investments or
determination of the value of the net assets of the Fund not reasonably
practicable.
<PAGE>
Shares of the Fund may be redeemed through certain brokers, financial
institutions, service organizations, banks, and bank trust departments who may
charge the investor a transaction or other fee for their services at the time of
redemption. Such additional transaction fees would not otherwise be charged if
the shares were redeemed directly from the Fund.
16
<PAGE>
TELEPHONE TRANSACTIONS
Shareholders who wish to initiate redemption transactions by telephone must
first elect the option, as described above. Neither the Fund nor any of its
service contractors will be liable for any loss or expense in acting upon
telephone instructions that are reasonably believed to be genuine. In this
regard, the Fund and its transfer agent require personal identification
information before accepting a telephone redemption. To the extent that the Fund
or its transfer agent fail to use reasonable procedures to verify the
genuineness of telephone instructions, the Fund may be liable for losses due to
fraudulent or unauthorized instructions. The Fund reserves the right to refuse a
telephone redemption if it is believed advisable to do so. Written confirmation
will be provided for all redemption transactions initiated by telephone.
MINIMUM BALANCES
Due to the relatively high cost of maintaining smaller accounts, the Fund
reserves the right to involuntarily redeem shares in any account at its then
current net asset value (which will be promptly paid to the shareholder) if at
any time the total investment does not have a value of at least $500 as a result
of redemptions, but not market fluctuations. A shareholder will be notified that
the value of his or her account is less than the required minimum and such
shareholder will be allowed at least 60 days to bring the value of his or her
account up to the minimum before the redemption is processed.
SHAREHOLDER SERVICES
The following special services are available to shareholders of the Fund.
There are no charges for the programs noted below and a shareholder may change
or stop these plans at any time by written notice to the Fund.
AUTOMATIC INVESTMENT PLAN
Once an account has been opened, a shareholder can make additional monthly
purchases of shares of the Fund through an automatic investment plan. An
investor may authorize the automatic withdrawal of funds from his or her bank
account by opening his or her account with a minimum of $5,000 for Class A
Shares or $10,000 for Class D Shares, and completing the appropriate section on
the new account application enclosed with this Prospectus. Subsequent monthly
investments are subject to a minimum required amount of $100.
RETIREMENT PLANS
The Fund is available for investment by pension and profit sharing plans
including Traditional Individual Retirement Accounts, Roth, Education, SEP,
Keogh, 401(k) and 403(b) plans through which an investor may purchase Fund
shares. For details concerning any of the retirement plans, please call the Fund
at (888) BUY-GROW or (888) 289-4769 (foreign investors may call (703) 847-6792).
The Taxpayers Relief Act which was signed into law on August 5, 1997, impacts
the traditional IRA and creates two additional types of IRAs.
Traditional (deductible) IRAs:
The Taxpayers Relief Act will gradually increase the adjusted gross income
phaseouts for deductible IRAs over the next ten years. Married individuals may
make deductible contributions even if spouses are active participants in an
employer-sponsored plan. The 10% early withdrawal tax will not apply for up to
$10,000 for first-time home purchases or education expenses.
Roth IRAs:
The Taxpayers Relief Act has created the new Roth IRA. While contributions to a
Roth IRA are not currently deductible, the amounts within the accounts
accumulate tax-free and qualified distributions will not be included in a
shareholder's taxable income. The contribution limit is $2,000 annually ($4,000
for joint returns) in aggregate with contributions to Traditional IRAs. Certain
income phaseouts apply.
<PAGE>
Education IRAs:
The Taxpayers Relief Act has also created the new Education IRA. Like the Roth
IRA, contributions are non-deductible, but the investment earnings accumulate
tax-free, and distributions used for higher education expenses are not taxable.
Contributions limits are $500 per account and certain income phaseouts apply.
NET ASSET VALUE
The net asset value per share is calculated separately for each class of the
Fund and is computed once daily as of the close of regular trading on the NYSE,
currently 4:00 p.m. Eastern time. Currently, the NYSE is closed on the following
holidays or days on which the following holidays are observed: New Year's Day,
Martin Luther King, Jr., Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas.
The net asset value per share of each class is computed by dividing the net
assets attributable to a class of shares by the total number of outstanding
shares for that class. Expenses are accrued daily and applied when determining
the net asset value. The Fund's equity securities are valued based on market
quotations or, when no market quotations are available, at fair value as
determined in good faith by, or under direction, of the Board of Trustees.
17
<PAGE>
Foreign securities are valued as of the close of trading on the primary
exchange on which they trade. The value is then converted to U.S. dollars using
current exchange rates. Securities listed on any national securities exchange
are valued at their last sale price on the exchange where the securities are
principally traded or, if there has been no sale on that date, at the mean
between the last reported bid and asked prices. Securities traded
over-the-counter are priced at the mean of the last bid and asked prices. Listed
securities which are traded by foreign investors in the Greater Asia Region in
over-the-counter transactions are valued at prices at which it is expected that
such securities may be sold, as determined in good faith by, or under the
direction of, the Board of Trustees.
Securities are valued through valuations obtained from a commercial pricing
service or at the most recent mean of the bid and asked prices provided by
investment dealers in accordance with procedures established by the Board of
Trustees.
Short-term investments having a maturity of 60 days or less are valued at
amortized cost, which the Board of Trustees believes represents fair value. When
a security is valued at amortized cost, it is valued at its cost when purchased,
and thereafter by assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. All other securities and other assets are valued at
their fair value as determined in good faith under procedures established by and
under the supervision of the Board of Trustees.
Foreign currency exchange rates and prices of securities traded on foreign
exchanges are generally determined prior to the close of trading on the NYSE.
Occasionally, events affecting the value of foreign investments and such
exchange rates occur between the time at which they are determined and the close
of trading on the NYSE. Such events would not normally be reflected in a
calculation of the Fund's net asset value on that day. If events that materially
affect the value of the Fund's foreign investments or the foreign currency
exchange rates occur during such period, the investments will be valued at their
fair value as determined in good faith by, or under the direction of, the Board
of Trustees. Foreign securities held by the Fund may be traded on days and at
times when the NYSE is closed. Accordingly, the net asset value of the Fund may
be significantly affected on days when shareholders have no access to the Fund.
For valuation purposes, quotations of foreign portfolio securities, other
assets and liabilities and forward contracts stated in foreign currency are
translated into U.S. dollar equivalents at the prevailing market rates.
Net asset value is calculated separately for each class of the Fund based on
expenses applicable to the particular class. Although the methodology and
procedures for determining net asset value are identical for the Fund's classes,
the net asset value of the classes may differ because of the different fees and
expenses charged to each class.
DIVIDENDS AND TAXES
DIVIDENDS
The Fund will distribute its net investment income annually in December. Any
net gain realized from the sale of portfolio securities and net gains realized
from foreign currency transactions are distributed at least once each year
unless they are used to offset losses carried forward from prior years, in which
case no such gain will be distributed. Such income dividends and capital gain
distributions are reinvested automatically in additional shares at net asset
value, unless a shareholder elects to receive them in cash. Distribution options
may be changed at any time by requesting a change in writing.
Any check tendered in payment of dividends or other distributions which
cannot be delivered by the post office or which remains uncashed for a period of
more than one year may be reinvested in the shareholder's account at the then
current net asset value, and the dividend option may be changed from cash to
reinvest. Dividends are reinvested on the ex-dividend date (the "ex-date") at
the net asset value determined at the close of business on that date. Dividends
and distributions are treated the same for tax purposes whether received in cash
or reinvested in additional shares. Please note that shares purchased shortly
before the record date for a dividend or distribution may have the effect of
returning capital although such dividends and distributions are subject to
taxes.
18
<PAGE>
TAXES
The Fund is qualified, and intends to continue to qualify as a "regulated
investment company" for purposes of the Internal Revenue Code of 1986, as
amended (the "Code"), which will relieve the Fund of any liability for federal
income tax to the extent that its earnings and net realized capital gains are
distributed to shareholders. To so qualify, the Fund will, among other things,
limit its investments so that, at the close of each quarter of its taxable year,
(i) not more than 25% of the market value of the Fund's total assets will be
invested in the securities of any single issuer and (ii) with respect to 50% of
the market value of its total assets, not more than 5% of the market value of
its total assets will be invested in the securities of any single issuer, and
the Fund will not own more than 10% of the outstanding voting securities of any
single issuer.
An investment in the Fund has certain tax consequences, depending on the type
of account. The Fund will distribute all of its net investment income to
shareholders. Distributions are subject to federal income tax and may also be
subject to state and local income taxes. Distributions are generally taxable
when they are paid, whether in cash or by reinvestment in additional shares,
except that distributions declared in October, November or December and paid in
the following January are taxable as if they were paid on December 31. If you
have a qualified retirement account, taxes are generally deferred until
distributions are made from the retirement account.
For federal income tax purposes, income dividends and short-term capital gain
distributions are taxed as ordinary income. Distributions of net capital gains
(the excess of net long-term capital gain over net short-term capital loss) are
usually taxed as long-term capital gains, regardless of how long a shareholder
has held the Fund's shares. The tax treatment of distributions of ordinary
income or capital gains will be the same whether the shareholder reinvests the
distributions or elects to receive them in cash.
Shareholders may be subject to a 31 percent back-up withholding on reportable
dividend and redemption payments ("back-up withholding") if a certified taxpayer
identification number is not on file with the Fund, or if to the Fund's
knowledge, an incorrect number has been furnished. An individual's taxpayer
identification number is his/her social security number.
Shareholders will be advised annually of the source and tax status of all
distributions for federal income tax purposes. Information accompanying a
shareholder's statement will show the portion of those distributions that are
not taxable in certain states. Further information regarding the tax
consequences of investing in the Fund is included in the Statement of Additional
Information. The above discussion is intended for general information only.
Investors should consult their own tax advisers for more specific information on
the tax consequences of particular types of distributions.
The Fund intends to make sufficient distributions prior to the end of each
calendar year in order to avoid liability for federal excise tax.
Dividends and interest received by the Fund from sources within foreign
countries may be subject to foreign income taxes withheld at the source. To the
extent that the Fund is liable for foreign income taxes so withheld, the Fund
intends to operate so as to meet the requirements of the Code to pass through to
the shareholders credit for foreign income taxes paid. Although the Fund intends
to meet Code requirements, in order to pass through credit for such taxes, there
can be no assurance that the Fund will be able to do so.
Sale, exchange or redemption of the Fund's shares is a taxable event to the
shareholder.
THE TAXPAYERS RELIEF ACT
The Taxpayers Relief Act, which was signed into law on August 5, 1997,
is the most wide-ranging tax legislation since 1986. Several provisions therein
will impact the taxation of capital gains.
<PAGE>
Change in Rates:
The Taxpayers Relief Act has lowered the tax rate for long-term capital
gains from 28% to 20%, but increases the holding period of the assets from more
than one year to more than eighteen months. For persons in the 15% income tax
bracket, the new rate is 10%. Realized gains from capital assets held more than
one year, but eighteen months or less, will be taxed at a 28% rate. Such gains
will be termed "mid-term" capital gains. Also, capital gains in property held
for more than five years will be eligible for an 18% tax rate, but this only
applies to assets acquired after December 31, 2000; therefore, a shareholder
will not benefit from this provision until the year 2006.
Effective Dates:
The rates which applied under prior law are effective for capital gains
realized before May 7, 1997. Capital gains realized on or after May 7, 1997, but
before July 29, 1997, will be subject to a 20% tax rate for assets held more
than one year. These new tax rates, including the new mid-term category, apply
for gains realized on or after July 29, 1997.
Statements as to the tax status of distributions to shareholders will
be mailed annually. If shareholders are not subject to Federal income taxes on
their income, they are not required to pay Federal tax on amounts distributed to
them. This section is not intended to be a complete discussion of all aspects of
the Federal income tax law and its effect on shareholders. For other tax
information, you may wish to consult your tax adviser.
PERFORMANCE INFORMATION
Performance information such as total return for the Fund may be quoted in
advertisements or in communications to shareholders. Such performance
information may be useful in reviewing the performance of the Fund and for
providing a basis for comparison with other investment alternatives. However,
because the net investment return of the Fund changes in response to
fluctuations in market conditions, interest rates and Fund expenses, any given
19
<PAGE>
performance quotation should not be considered representative of the Fund's
performance for any future period. The value of an investment in the Fund will
fluctuate and an investor's shares, when redeemed, may be worth more or less
than their original cost. Total return and yield are calculated separately for
Class A Shares and Class D Shares.
The Fund's total return is the change in value of an investment in the Fund
over a particular period, assuming that all distributions have been reinvested.
Thus, total return reflects not only income earned, but also variations in share
prices at the beginning and end of the period. Average annual return reflects
the average percentage change per year in the value of an investment in the
Fund. Aggregate total return reflects the total percentage change over the
stated period. Please refer to the Statement of Additional Information for more
information on performance.
The performance of Class D Shares will normally be higher than for Class A
Shares after giving effect to the sales charge which may be applicable to Class
A Shares. Shareholders may obtain current performance information about the Fund
by calling (888) AAA-JTSO or (888) 222-5876 or (703) 847-6792.
GENERAL INFORMATION
TRUSTEES AND OFFICERS OF THE FUND
The Trustees of the Fund have overall responsibility for the operation of the
Fund. The officers of the Fund who are employees or officers of the Adviser
serve without compensation from the Fund.
DESCRIPTION OF SHARES
The Trust is authorized to issue an unlimited number of shares of beneficial
interest with no par value. Shares of the Fund represent equal proportionate
interests in the assets of the Fund only, and have identical voting, dividend,
redemption, liquidation and other rights. All shares issued are fully paid and
non-assessable, and shareholders have no preemptive or other right to subscribe
to any additional shares. Currently, there are two classes of shares issued by
the Fund. The validity of shares of beneficial interest offered by this
prospectus has been passed on by Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800. All accounts will be maintained in
book entry-form and no share certificates will be issued.
VOTING RIGHTS
A shareholder is entitled to one vote for each full share held (and a
fractional vote for each fractional share held). All shares of the Fund
participate equally in regard to dividends, distributions, and liquidations with
respect to the Fund. Shareholders do not have preemptive, conversion or
cumulative voting rights.
SHAREHOLDER MEETINGS
The Trustees are not required, and do not intend, to hold annual meetings of
shareholders. The Trustees have undertaken to the Securities and Exchange
Commission, however, that they will promptly call a meeting of shareholders for
the purpose of voting upon the question of removal of any Trustee when requested
to do so by holders of not less than 10% of the outstanding shares of the Fund.
In addition, subject to certain conditions, shareholders of the Fund may apply
to the Fund to communicate with other shareholders to request a shareholders'
meeting to vote upon the removal of a Trustee or Trustees.
SHAREHOLDER REPORTS AND INQUIRIES
The Trust issues unaudited financial information semiannually and audited
financial statements annually. Shareholder inquiries should be addressed to the
Fund c/o SAGE/TSO Investment Management L.P., 7799 Leesburg Pike, Suite 900,
Falls Church, Virginia 22043, (888) AAA-JTSO or (888) 222-5876 or (703)
847-6792. Purchase and redemption transactions should be made through the
transfer agent by calling (888) BUY-GROW or (888) 289-4769 (foreign investors
may call (703) 847-6792).
20
<PAGE>
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of permitted investments for the Fund, and the
associated risk factors:
ADRS AND EDRS - For many foreign securities, there are United States dollar
denominated American Depository Receipts ("ADRs"), which are bought and sold in
the Unites States and are issued by domestic banks. ADRs represent the right to
receive securities of foreign issuers deposited in the domestic bank or a
correspondent bank. ADRs do not eliminate all the risk inherent in investing in
the securities of foreign issuers. By investing in ADRs rather than directly in
foreign issuer's stock however, the Fund will avoid currency risks during the
settlement period for either purchases or sales. In general, there is a large,
liquid market in the United States for most ADRs. ADRs may be available through
"sponsored" or "unsponsored" facilities. A sponsored facility is established
jointly by the issuer of the security underlying the receipt and a depository;
whereas, an unsponsored facility may be established by a depository without
participation by the issuer of the underlying security. Holders of the
unsponsored depository receipts generally bear all the costs of the unsponsored
facility. The depository of an unsponsored facility frequently is under no
obligation to distribute shareholder communications received from the issuer of
the deposited security or to pass through, to the holders of the receipts,
voting rights with respect to the deposited securities. The Fund may also invest
in European Depository Receipts ("EDRs") which are receipts evidencing an
arrangement with a European bank similar to that for ADRs and are designed for
use in the European securities markets. EDRs are not necessarily denominated in
the currency of the underlying security.
BANKERS' ACCEPTANCES - Bankers' acceptances are bills of exchange or time drafts
drawn on and accepted by a commercial bank or trust company. Bankers'
acceptances are used by manufacturers and exporters to finance the shipment and
storage of goods. Maturities are generally six months or less.
CERTIFICATES OF DEPOSIT - Certificates of deposit are interest bearing
instruments with a specific maturity. They are issued by banks and savings and
loan institutions in exchange for the deposit of funds and normally can be
traded in the secondary market prior to maturity. Certificates of deposit with
penalties for early withdrawal will be considered illiquid.
COMMERCIAL PAPER - Commercial paper is a term used to describe unsecured
short-term promissory notes issued by banks, municipalities, corporations and
other entities. Maturities on these issues vary from a few to 270 days.
CONVERTIBLE SECURITIES - Convertible securities are corporate securities that
are exchangeable for a set number of another security at a prestated price.
Convertible securities typically have characteristics similar to both fixed
income and equity securities. Because of the conversion feature, the market
value of a convertible security tends to move with the market value of the
underlying stock. The value of a convertible security is also affected by
prevailing interest rates, the credit quality of the issuer, and any call
provisions.
FIXED INCOME SECURITIES - Fixed income securities are debt obligations issued by
corporations, municipalities and other borrowers. The market value of fixed
income investments will change in response to interest rate changes and other
factors. During periods of falling interest rates, the values of outstanding
fixed income securities generally rise. Conversely, during periods of rising
interest rates, the values of such securities generally decline. Moreover, while
securities with longer maturities tend to produce higher yields, the prices of
longer maturity securities are also subject to greater market fluctuations as a
result of changes in interest rates. Changes by recognized agencies in the
rating of any fixed income security and in the ability of an issuer to make
payments of interest and principal will also affect the value of these
investments. Changes in the value of portfolio securities will not affect cash
income derived from these securities but will affect the Fund's net asset value.
INVESTMENT COMPANIES - The Fund may invest in shares of other investment
companies including foreign investment companies. Some of the countries in which
the Fund invests may not permit direct investment. Investments in such countries
may only be permitted through foreign government approved or authorized
investment vehicles, which may include investment companies. Investing through
such vehicles may involve frequent or layered fees
<PAGE>
or expenses and may, as well, be subject to limitations under the Investment
Company Act of 1940 (the "1940 Act"). Under the 1940 Act, the Fund may invest up
to 10% of its assets in shares of investment companies and up to 5% of its
assets in any one investment company as long as the investment does not
represent more than 3% of the voting stock of the acquired investment company.
21
<PAGE>
INVESTMENT GRADE SECURITIES - Investment grade debt securities are those
receiving one of the four highest ratings from Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Ratings Group, or another nationally recognized
statistical rating organization ("NRSRO") or, if unrated by any NRSRO, deemed
comparable by the Adviser to such rated securities. Securities rated in the
lowest category of investment grade are considered to have speculative
characteristics.
FORWARD FOREIGN CURRENCY CONTRACTS, CURRENCY OPTIONS, AND CURRENCY FUTURES
CONTRACTS - In order to hedge against possible changes in the exchange rates of
foreign currencies in relation to the U.S. dollar, the Fund may enter into
forward currency exchange contracts and use options on foreign currencies, but
only for the purpose of hedging. Forward foreign currency contracts involve
obligations to purchase or sell a specified currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. The Fund may enter into
forward contracts to sell foreign currency provided that no more than 15% of the
Fund's total assets would be required to purchase offsetting contracts.
HEDGING - The Fund may engage in various portfolio strategies to reduce certain
risks of its investments and to attempt to enhance income. These strategies may,
however, prove ineffective, in enhancing income and fail to produce any income
for the Fund in certain instances. The Fund may invest up to 5% of its total
assets, taken at market value at the time of investment, in premiums on such
hedging strategies. These strategies currently include the use of options,
forward currency exchange contracts and futures contracts and options thereon.
The Fund's ability to use these strategies may be limited by market conditions,
regulatory limits and tax considerations and there can be no assurance that any
of these strategies will succeed.
IDRS - IDRs (International Depository Receipts, also known as GDRs or Global
Depository Receipts) are similar to ADRs except that they are bearer securities
for investors or traders outside the United States, and for companies wishing to
raise equity capital in securities markets outside the United States. Most IDRs
have been used to represent shares although it is possible to use them for
bonds, commercial paper and certificates of deposit. IDRs can be convertible to
ADRs in New York making them particularly useful for arbitrage between the
markets. The Fund has no current intention to invest in unsponsored IDRs.
OPTIONS AND FUTURES - Although the Fund has no present intentions to engage in
transactions involving the use of options and futures contracts, the Fund may
engage in such transactions for purposes of increasing its investment return or
hedging against market changes. The Fund may buy and sell stock index futures
contracts for hedging purposes. An "index future" is a contract to buy or sell
units of a particular stock index at an agreed price on a specified future date.
Depending on the change in value of the index between the time when the Fund
enters into and terminates an index future transaction, the Fund realizes a gain
or loss. The Fund may buy and sell call and put options and index futures or on
stock indices in addition to or as an alternative to purchasing or selling index
futures or, to the extent permitted by applicable law, to earn additional
income. The Fund may seek to increase its current return by writing covered call
and put options on securities it owns or in which it may invest. The Fund
receives a premium for writing a call or put option, which increases the Fund's
return if the option expires unexercised or is closed out at a net profit. When
the Fund writes a call option, it gives up the opportunity to profit from any
increase in the price of a security above the exercise price of the option.
REPURCHASE AGREEMENTS - Repurchase agreements are agreements by which the Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price on an agreed upon date within a number of days
from the date of purchase. The custodian will hold the security as collateral
for the repurchase agreement. The Fund bears a risk of loss in the event the
other party defaults on its obligations and the Fund is delayed or prevented
from exercising its right to dispose of the collateral, or if the Fund realizes
a loss on the sale of the collateral. The Fund will enter into repurchase
agreements only with financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on established guidelines.
Repurchase agreements are considered loans under the 1940 Act.
RESTRICTED SECURITIES - Restricted securities are securities that may not be
sold to the public without registration under the Securities Act of 1933, as
amended, absent an
<PAGE>
exemption from registration.
U.S. GOVERNMENT SECURITIES - U.S. Government Securities include obligations
issued by agencies or instrumentalities of the U.S. Government including, among
others, Export Import Bank of the United States, Farmers Home Administration,
Federal Farm Credit System, Federal Housing Administration, Maritime
Administration, Small
22
<PAGE>
Business Administration, and The Tennessee Valley Authority. Obligations of
instrumentalities of the U.S. Government include securities issued by, among
others, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal
Intermediate Credit Banks, Federal Land Banks, Federal National Mortgage
Association and the U.S. Postal Service. Some of these securities are supported
by the full faith and credit of the U.S. Treasury (e.g., Government National
Mortgage Association), others are supported by the right of the issuer to borrow
from the Treasury (e.g., Federal Farm Credit Bank) and still others are
supported only by the credit of the instrumentality (e.g., Federal National
Mortgage Association). Guarantees of principal by agencies or instrumentalities
of the U.S. Government may be a guarantee of payment at the maturity of the
obligation so that in the event of a default prior to maturity there might not
be a market and thus no means of realizing on the obligation prior to maturity.
Guarantees as to the timely payment principal and interest do not extend to the
value or yield of these securities nor to the value of the Fund's shares.
WARRANTS - Warrants are instruments that give holders the right, but not the
obligation, to buy shares of a company at a given price during a specified
period.
23
<PAGE>
INVESTMENT ADVISER
SAGE/TSO Investment Management L.P.
7799 Leesburg Pike, Suite 900
Falls Church, Virginia 22043
(888) AAA-JTSO or (888) 222-5876
(703) 847-6792
UNDERWRITER
ADS Distributors, Inc.
101 Main Street
Suite E
Safety Harbor, Florida 34695
SHAREHOLDER SERVICES
American Data Services, Inc.
PO Box 5536
Hauppauge, New York, 11788
(888) BUY-GROW or
(888) 289-4769
CUSTODIAN
Star Bank
435 Walnut Street
Cincinnati, Ohio 45202
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, DC 20036-1800
AUDITORS
McCurdy & Associates CPA's, Inc.
27955 Clemens Road
Westlake, Ohio 44145
For Additional Information about America Asia
Allocation Growth Fund call:
(888) AAA-JTSO or (888) 222-5876
<PAGE>
STAR BANK, CUSTODIAN
FOR AMERICA ASIA ALLOCATION GROWTH FUND
REQUEST FOR TRANSFER OF IRA
1. INVESTOR INFORMATION:
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- ------------------------------------------------------
First Name Middle Initial Last Name
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- --------------------------------------------------------------
Address
|||||||||||||||||||||||| ||||| |||||||||||-|||||||||||
- ----------------------- ---- -----------------------
City State Zip Code
||| |||||| ||||||| |||||||||||||||
--- ------ ------- ---------------
Social Security Number Date of Birth
================================================================================
2. PREVIOUS TRUSTEE/CUSTODIAN INFORMATION:
||||||||||||||||||||||||||||||||||||||||||||||||||||||
- ------------------------------------------------------
Name of Previous Trustee/Custodian
||||||||||||||||||||||||||||||||||||||||||||||||||||||
- ------------------------------------------------------
Address
|||||||||||||||||||||||||||||||||-|||||||||||
- ---------------------------------------------
Investor's Name Account Number
Type of Account: [ ]Individual [ ]Spousal [ ]Rollover or Transfer [ ]SEP
[ ]Roth IRA [ ]Educational
[ ]Immediately
Type of Assets: [ ]Mutual Fund [ ]Money Market [ ]CD [ ]Securities
[ ]At Maturity (date)
================================================================================
3. TRANSFER IRA INSTRUCTIONS:
[ ] This is a new IRA account. Individual Retirement Account Application must be
attached.
[ ] Please deposit into my existing IRA account #:________________
AMOUNT TO BE TRANSFERRED:
[ ] Liquidate all assets from the above account and transfer the proceeds.
[ ] Liquidate $/%_______ from the above account and transfer the proceeds.
================================================================================
4. INVESTMENT SECTION: (MAKE CHECK PAYABLE TO THE FUND)
The proceeds to be transferred should be invested in the following Funds(s):
Account Number
Fund Name Amount (if existing account)
--------- ------ --------------
Class A $_________________ __________________________
Class D $_________________ __________________________
================================================================================
5. INVESTOR'S AUTHORIZATION: I have adopted an IRA with the institution named at
the top of this request form as custodian. I understand that since this is a
transfer from Custodian to Custodian, I will not be in receipt of my IRA
assets.
- ---------------------------- ----------- -----------------------------
Signature of Participant Date Signature Guarantee
================================================================================
6. ACCEPTANCE: The above IRA Transfer is accepted by the institution named at
the top of this request form as custodian.
- ---------------------------------------------------------------- ---------
Authorized Signature: American Data Services, Inc., Custodian's Agent Date
MAIL TO: AMERICAN DATA SERVICES, INC. P.O. BOX 5536, HAUPPAUGE, NY 11788-0132
<PAGE>
Transferring IRA Accounts
Here are some helpful reminders:
1. If you need to make more than one transfer (multiple IRA accounts), please
make photocopies of the IRA Account Transfer Form. Total of all IRA transfers
and contributions must equal a minimum of $2000.
2. For brokerage or bank transfers, fill out a separate form for each account
you're transferring. For mutual fund transfers, fill out one form for each
mutual fund company. Each must have an original signature.
3. Attach a copy of the most recent statement for each account you are
transferring.
4. Complete all sections of the Account Transfer Form.
5. If you are also opening a new IRA account with America Asia Allocation Growth
Fund, enclose a completed IRA Account Application Form.
6. Return your statements and forms in the postage-paid envelope.
<PAGE>
TO: STAR BANK, CUSTODIAN
FOR THE AMERICA ASIA ALLOCATION GROWTH FUND
INDIVIDUAL RETIREMENT ACCOUNT APPLICATION
1. REGISTRATION: (PLEASE PRINT - ONE NAME ONLY)
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- ---------------------------------------------------------------
First Name Middle Initial Last Name
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- ---------------------------------------------------------------
Address
|||||||||||||||||||||||| ||||| |||||||||||-|||||||||||
- ----------------------- ---- -----------------------
City State Zip Code
||| |||||| ||||||| |||||||||||||||
--- ------ ------- ---------------
Social Security Number Date of Birth
Telephone Number: (Daytime)____________ (Evening)____________
================================================================================
2. TYPE OF ACCOUNT: (CHECK ONE AS APPLICABLE)
[ ] Regular IRA $___________ [ ] Current Year [ ] Prior Year
[ ] Spousal IRA $___________ [ ] Current Year [ ] Prior Year
[ ] Rollover IRA $___________ (Do not combine with Regular IRA)
[ ] IRA Transfer $___________ (Please attach separate transfer form)
[ ] SEP IRA $___________ (Please include Employer name and address)
[ ] ROTH IRA
[ ] Educational IRA
- --------------------------------------------------------------------------------
Employer Name (SEP accounts only)
- --------------------------------------------------------------------------------
Employer Address
================================================================================
3. CONTRIBUTION: (Make Check Payable To Semper Trust Company/America Asia
Allocation Growth Fund)
YOUR IRA CONTRIBUTION MAY BE INVESTED IN ONE OR A COMBINATION OF:
Class A (161/490) $_______________
Class D (161/790) $_______________
================================================================================
4. DIVIDEND DISTRIBUTIONS: (ALL DIVIDENDS AND CAPITAL GAINS ARE REINVESTED)
================================================================================
5. DESIGNATION OF BENEFICIARY:
PRIMARY BENEFICIARY
||||||||||||||||||||||||||||||||||||||||||||||||||||
- ---------------------------------------------------- ---------------
Name Relationship
||||||||||||||||||||||||||||||||||||||||||||||||||||
- ----------------------------------------------------
Address
||| |||||| ||||||| |||||||||||||||
--- ------ ------- ---------------
Social Security Number Date of Birth
SECONDARY BENEFICIARY(IES)
||||||||||||||||||||||||||||||||||||||||||||||||||||
- ---------------------------------------------------- ---------------
Name Relationship
||||||||||||||||||||||||||||||||||||||||||||||||||||
- ----------------------------------------------------
Address
||| |||||| ||||||| |||||||||||||||
--- ------ ------- ---------------
Social Security Number Date of Birth
<PAGE>
================================================================================
6. SIGNATURE AND CERTIFICATION:
The undersigned hereby acknowledges receipt of and has read the Custodial
Agreement, Disclosure Statement and Prospectus of the Fund(s) and hereby
appoints Star Bank as Custodian; consents to Custodian's fees and terms of
the Custodial Agreement.
The following is required by Federal tax law to avoid 31% backup withholding:
"By signing below, I certify under penalties of perjury that the social
security number or tax I.D. number entered above is correct (or I am waiting
for a number to be issued to me) and that I have not been notified by the IRS
that I am subject to backup withholding unless I have checked the box." [ ]
The Internal Revenue Services does not require your consent to any provisions
of this document other than the certifications required to avoid back-up
withholding.
------------------------------------ --------------------------
Signature Date
================================================================================
7. ACCEPTANCE: Plan acceptance by the Custodian is evidenced by the statement
confirmation issued by American Data Services, Inc. reflecting the investment
of your monies in the selected fund(s).
Plan Administrator____________________________________
MAIL TO: AMERICAN DATA SERVICES, INC. P.O. BOX 5536, HAUPPAUGE, NY 11788-0132
FOR INVESTMENT DEALER ONLY
||||||||||||||||||||||||||||||| |||||||||||||||||||||||
- ------------------------------- -----------------------
Firm Name Branch/Branch #
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- --------------------------------------------------------------
Branch Address
|||||||||||||||||||||||| ||||| |||||||||||-|||||||||||
- ----------------------- ---- ---------- -----------
City State Zip Code
|||||||||||||||| ||||||||||||||||||||| ||||||||||||||||||
- ---------------- --------------------- ------------------ ------------
Rep # Rep's Last Name Rep's First Name Phone number
--------------------------------------------
Rep's Address if different than Branch
================================================================================
<PAGE>
AAA
LOGO
AUTOMATIC INVESTMENT PLAN APPLICATION
- --------------------------------------------------------------------------------
HOW DOES IT WORK?
1. American Data Services, Inc., through our bank, Star Bank, NA, draws an
automatic clearing house (ACH) debit electronically against your personal
checking account each month, according to your instructions.
2. Choose any amount ($100 or more) that you would like to invest regularly and
your debit for this amount will be processed by American Data Services, Inc.
as if you had written a check yourself.
3. Shares will be purchased and a confirmation sent to you.
HOW DO I SET IT UP?
1. Complete the forms and the Fund Application Form if you do not already have
an existing account.
2. Mark one of your personal checks VOID, attach it to the forms below and mail
to American Data Services, Inc., P.O. Box 5536, Hauppauge, NY 11788-0132.
3. As soon as your bank accepts your authorization, debits will be generated and
your Automatic Investment Plan started. In order for you to have ACH debits
from your account, your bank must be able to accept ACH transactions and/or
be a member of an ACH association. Your branch manager should be able to tell
you your bank's capabilities. We cannot guarantee acceptance by your bank.
4. Please allow one month for processing of your Automatic Investment Plan
before the first debit occurs.
AUTHORIZATION
TO: American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
Please start an Automatic Investment Plan for me and invest -------------- on
($100 or more)
the[ ] 10th [ ] 15th [ ] 20th of each month, in shares of "America Asia
Allocation Growth Fund"
Check one:
[ ] I am in the process of establishing an account.
or
[ ] My account number is: ------------------------------------------------------
- --------------------------------------------------------------------------------
Name as account is registered
- --------------------------------------------------------------------------------
Street
- --------------------------------------------------------------------------------
City State Zip + ext.
I understand that my ACH debit will be dated on the day of each month as
indicated above or as specified by written request. I agree that if such debit
is not honored upon presentation, American Data Services, Inc. may discontinue
this service and any share purchase made upon deposit of such debit may be
cancelled. I further agree that if the net asset value of the shares purchased
with such debit is less when said purchase is cancelled than when the purchase
was made, American Data Services, Inc. shall be authorized to liquidate other
shares or fractions thereof held in my account to make up the deficiency. This
Automatic Investment Plan may be discontinued by American Data Services, Inc.
upon 30-days written notice or at any time by the investor by written notice to
American Data Services, Inc. which is received not later than 5 business days
prior to the above designed investment date.
Signature(s): -------------------------------------------------
-------------------------------------------------
<PAGE>
AUTOMATIC INVESTMENT PLAN APPLICATION
- --------------------------------------------------------------------------------
BANK REQUEST AND AUTHORIZATION
TO: -------------------------------------- ---------------------------------
Name of Your Bank Bank Checking Account Number
-----------------------------------------------------------------------------
Address of Bank or Branch Where Account is Maintained
ABA Number (9 digits) -------------------------------------------------------
Bank Account owner ----------------------------------------------------------
Bank Account Joint owner ----------------------------------------------------
As a convenience to me, please honor ACH debits on my account drawn by American
Data Services, Inc., Star Bank, NA and payable to "America Asia Allocation
Growth Fund."
I agree that your rights with respect to such debit shall be the same as if it
were a check drawn upon you and signed personally by me. This authority shall
remain in effect until you receive written notice from me changing its terms or
revoking it, and until you actually receive such notice, I agree that you shall
be fully protected in honoring such debit.
I further agree that if any debit is dishonored, whether with or without cause
or whether intentionally or inadvertently, you shall be under no liability
whatsoever.
DEPOSITOR'S -------------------------------------------------------------------
Signature of Bank Depositor(s) as shown on bank records.
NOTE: Your bank must be able to accept ACH transactions and/or be a member of
an ACH association in order for you to use this service.
INDEMNIFICATION AGREEMENT
TO: The bank named above
So that you may comply with your Depositor's request and authorization, "America
Asia Allocation Growth Fund" agrees as follows:
1. To indemnify and hold you harmless from any loss you may suffer arising from
or in connection with the payment by you of a debit drawn by American Data
Services, Inc. to the order of "America Asia Allocation Growth Fund"
designated on the account of your depositor(s) executing the authorization
including any costs or expenses reasonably incurred in connection with such
loss. "America Asia Allocation Growth Fund" will not, however, indemnify you
against any loss due to your payment of any debit generated against
insufficient funds.
2. To refund to you any amount erroneously paid by you to American Data
Services, Inc. on any such debit if claim for the amount of such erroneous
payment is made by you within 3 months of the date of such debit on which
erroneous payment was made.
<PAGE>
AAA
LOGO
ACCOUNT APPLICATION FORM -- CLASS A
CLASS A SHARES ONLY SOLD THROUGH NASD REGISTERED REPRESENTATIVES
================================================================================
A. INITIAL INVESTMENT
INDICATE AMOUNT OF INVESTMENT:
The minimum initial investment is $5,000 and subsequent purchases must be at
least $200.
<TABLE>
<S> <C>
Amount of investment: $_________ [ ] Enclosed is my check (payable to America Asia Allocation Growth Fund)
[ ] Bank wire sent (Instructions to be provided upon establishment of account)
</TABLE>
================================================================================
B. REGISTRATION (Please print)
(Complete one)
[ ] INDIVIDUAL (USE LINE 1) [ ] JOINT ACCOUNT (USE LINES 1 & 2)
[ ] GIFT/TRANSFER TO MINOR (USE LINES 3, 4, & 5) [ ] CORPORATION, PARTNERSHIPS,
TRUSTS AND OTHERS (USE LINES 6 & 7)
---------------------------------------------------------------------------
1. Individual First Name Initial Last name
---------------------------------------------------------
Social Security number U.S. Citizen? [ ] Yes [ ] No
---------------------------------------------------------------------------
2. Joint Tenant First Name Initial Last name
----------------------------------------------------------
Social Security number U.S. Citizen? [ ] Yes [ ] No
Country of Citizenship _______
----------------------------------------------------------
Check one: [ ] Joint Tenancy (Right of Survivorship)
[ ] Tenants in Common (if none elected -- JTWROS)
---------------------------------------------------------------------------
3. Uniform Gift/ Custodian's name
Transfer to Minor is the custodian for
----------------------------------------------------------
4. Minor's Name Minor's name under the
----------------------------------------------------------
5. State Name of State Uniform Gift/Transfer to Minor Act
----------------------------------------------------------
Minor's Social Security number
---------------------------------------------------------------------------
6. Corporations, Corporation or Entity name Please attach a copy
Partnerships, of a Corporate Resolution
Trusts, and
Others
----------------------------------------------------------
Tax ID number
----------------------------------------------------------
7. Type of Registration [ ]Corporation [ ]Partnership [ ]Trust
[ ]Other sponsored IRA and Retirement Plans [ ]Other
Trustees Contact ------------------
================================================================================
Street or P.O. Box City State Zip Code
C. MAILING ADDRESS
----------------------------------------------------------
Home Telephone Country of residence Daytime Telephone
----------------------------------------------------------
Duplicate Street or P.O. Box City State Zip Code
Confirmation
Statement sent to: ----------------------------------------------------------
Home Telephone Daytime Telephone
----------------------------------------------------------
[ ] Please check here if this is a modification to an existing account.
Existing account number: --------------------------
================================================================================
D. DIVIDEND OPTIONS
Check one only: if none are checked all dividend income and capital gains, if
any, will be reinvested.
<TABLE>
<S> <C>
[ ] All dividend income and capital gains reinvested. [ ] Dividend income paid by check and capital gains reinvested.
[ ] All dividend income and capital gains paid by check.
</TABLE>
<PAGE>
E. LETTER OF INTENT/RIGHTS OF ACCUMULATION
LETTER OF INTENT
[ ] I intend to purchase, although I am not obligated to do so, shares of the
fund within a 13-month period which, together with the total asset value of
shares owned, will aggregate at least (check one):
[ ]$100,000 [ ] $200,000 [ ]$300,000
[ ]$500,000 [ ]$1,000,000
I agree to the terms and conditions, including the escrow provisions described
in the fund's current prospectus which I have received and read.
RIGHTS OF ACCUMULATION
I would like to apply Rights of Accumulation, if available, to my purchases of
Fund shares. I understand that the exercise of these rights is subject to
confirmation of my holdings by the Fund's transfer agent, American Data
Services, Inc. ("ADS"). I agree to notify ADS of my desire to apply these rights
at the time of purchase and to provide the account numbers, names and
relationships of each person to me.
- --------------------------------------------------------------------------------
Fund Account Title Fund Account Number
================================================================================
F. TELEPHONE PRIVILEGE
Proceeds of telephone redemption requests are paid by check and mailed to the
address of record or wired to your bank account. I (We) authorize ADS to act
upon instructions received by telephone from me (us) to redeem shares. Neither
the Fund nor American Data Services will be liable for properly acting upon
telephone instructions believed to be genuine. Please attach a voided personal
check and complete below.
Bank Name Branch Office (if applicable)
----------------------------------------------------------------
Bank Address City State Zip Code
----------------------------------------------------------------
Bank Wire Routing Number Bank Account Number
----------------------------------------------------------------
================================================================================
G. CUSTOMER AGREEMENT
1. I (We) have full right, power, authority and legal capacity, and am (are) of
legal age in my (our) state of residence to purchase shares of the Fund. I (we)
affirm that I (we) have received and read the current prospectus of the Fund and
agree to its terms. I (we) understand the investment objectives and program, and
have determined that the fund is a suitable investment, based upon my (our)
investment needs and financial situation. I (we) agree that ADS or any of their
affiliate officers, directors or employees will not be liable for any loss,
expense or cost for acting upon any instructions or inquiries believed genuine.
2. I (we) understand and acknowledge that a return on the selected fund(s) is
not guaranteed.
3. This agreement shall be governed by the laws of the State of New York.
================================================================================
H. SIGNATURES
TAXPAYER IDENTIFICATION NUMBER CERTIFICATION. UNDER THE PENALTIES OF PERJURY, I
(WE) CERTIFY THE FOLLOWING:
1. I (WE) CERTIFY THAT THE NUMBER SHOWN ON THIS FORM IS MY (OUR) CORRECT TAX
IDENTIFICATION NUMBER.
2. I (WE) AM NOT (ARE NOT) SUBJECT TO BACK-UP WITHHOLDING AS A RESULT OF A
FAILURE TO REPORT ALL INTEREST AND DIVIDENDS, OR THE INTERNAL REVENUE SERVICES
HAS NOTIFIED ME (US) THAT I (WE) AM (ARE) NO LONGER SUBJECT TO BACK-UP
WITHHOLDING.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISIONS OF
THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACK-UP
WITHHOLDING.
- ---------------------------------------------- -------------------------
SIGNATURE DATE
- --------------------------------------------------------------------------------
AND BACK-UP INDIVIDUAL (OR CUSTODIAN) DATE JOINT REGISTRATION, IF ANY
WITHHOLDING
--------------------------------------------------------------------
CORPORATE OFFICER, PARTNER, DATE TITLE
TRUSTEE, ETC.
--------------------------------------------------------------------
[ ] CHECK BOX IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE SUBJECT TO BACK-
UP WITHHOLDING.
================================================================================
Mail completed application forms to:
AMERICA ASIA ALLOCATION GROWTH FUND
P.O. BOX 5536
HAUPPAUGE, PA 11788-0132
For assistance call: (888) BUY-GROW or (888) 289-4769
For non U.S. investors call: (703) 847-6792
================================================================================
FOR NASD BROKER DEALER ONLY
||||||||||||||||||||||||||||||| |||||||||||||||||||||||
- ------------------------------- -----------------------
Firm Name Branch/Branch #
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- --------------------------------------------------------------
Branch Address
|||||||||||||||||||||||| ||||| ||||||||||| |||||||||||
- ----------------------- ---- ---------- -----------
City State Zip Code
|||||||||||||||| ||||||||||||||||||||| ||||||||||||||||||
- ---------------- --------------------- ------------------ ------------
Rep # Rep's Last Name Rep's First Name Phone number
--------------------------------------------
Rep's Address if different than Branch
<PAGE>
AAA
LOGO
ACCOUNT APPLICATION FORM -- CLASS D
CLASS D SHARES ONLY SOLD THROUGH INVESTMENT ADVISORS
================================================================================
A. INITIAL INVESTMENT
INDICATE AMOUNT OF INVESTMENT:
The minimum initial investment is $10,000 and subsequent purchases must be at
least $200.
<TABLE>
<S> <C>
Amount of investment: $_________ [ ] Enclosed is my check (payable to America Asia Allocation Growth Fund)
[ ] Bank wire sent (Instructions to be provided upon establishment of account)
</TABLE>
================================================================================
B. REGISTRATION (Please print)
(Complete one)
[ ] INDIVIDUAL (USE LINE 1) [ ] JOINT ACCOUNT (USE LINES 1 & 2)
[ ] GIFT/TRANSFER TO MINOR (USE LINES 3, 4, & 5) [ ] CORPORATION, PARTNERSHIPS,
TRUSTS AND OTHERS (USE
LINES 6 & 7)
---------------------------------------------------------------------------
1. Individual First Name Initial Last name
---------------------------------------------------------
Social Security number U.S. Citizen? [ ] Yes [ ] No
---------------------------------------------------------------------------
2. Joint Tenant First Name Initial Last name
----------------------------------------------------------
Social Security number U.S. Citizen? [ ] Yes [ ] No
Country of Citizenship _______
----------------------------------------------------------
Check one: [ ] Joint Tenancy (Right of Survivorship)
[ ] Tenants in Common
---------------------------------------------------------------------------
3. Uniform Gift/ Custodian's name
Transfer to Minor is the custodian for
----------------------------------------------------------
4. Minor's Name Minor's name under the
----------------------------------------------------------
5. State Name of State Uniform Gift/Transfer to Minor Act
----------------------------------------------------------
Minor's Social Security number
---------------------------------------------------------------------------
6. Corporations, Corporation or Entity name Please attach a copy
Partnerships, of a Corporate Resolution
Trusts, and
and Others
----------------------------------------------------------
Tax ID number
----------------------------------------------------------
7. Type of Registration [ ]Corporation [ ]Partnership
[ ]Other sponsored IRA and Retirement Plans [ ]Other
Street or P.O. Box City State Zip Code
C. MAILING ADDRESS
----------------------------------------------------------
Home Telephone Country of residence Daytime Telephone
----------------------------------------------------------
Duplicate Street or P.O. Box City State Zip Code
Confirmation
Statement sent to: ----------------------------------------------------------
Home Telephone Daytime Telephone
----------------------------------------------------------
[ ] Please check here if this is a modification to an existing account.
Existing account number: --------------------------
================================================================================
D. DIVIDEND OPTIONS
Check one only: if none are checked all dividend income and capital gains, if
any, will be reinvested.
<TABLE>
<S> <C>
[ ] All dividend income and capital gains reinvested. [ ] Dividend income paid by check and capital gains reinvested.
[ ] All dividend income and capital gains paid by check.
</TABLE>
<PAGE>
================================================================================
E. TELEPHONE PRIVILEGE
Proceeds of telephone redemption requests are paid by check and mailed to the
address of record or wired to your bank account.
I (we) authorize American Data Services to act upon instructions received by
telephone from me (us) to redeem shares. Neither the fund nor American Data
Services will be liable for properly acting upon telephone instructions believed
to be genuine. Please attach a voided personal check and complete below.
Bank Name Branch Office (if applicable)
----------------------------------------------------------------
Bank Address City State Zip Code
----------------------------------------------------------------
Bank Wire Routing Number Bank Account Number
----------------------------------------------------------------
================================================================================
F. CUSTOMER AGREEMENT
1. I (we) have full right, power, authority and legal capacity, and am (are) of
legal age in my (our) state of residence to purchase shares of the Fund. I (We)
affirm that I (we) have received and read the current prospectus of the Fund and
agree to its terms. I (We) understand the investment objectives and program, and
have determined that the Fund is a suitable investment, based upon my (our)
investment needs and financial situation. I (we) agree that American Data
Services or any of their affiliate officers, directors or employees will not be
liable for any loss, expense or cost for acting upon any instructions or
inquiries believed genuine.
2. I (We) understand and acknowledge that a return on the selected fund(s) is
not guaranteed.
3. This Agreement shall be governed by the laws of the State of New York.
================================================================================
G. SIGNATURES
TAXPAYER IDENTIFICATION NUMBER CERTIFICATION. UNDER THE PENALTIES OF PERJURY, I
(WE) CERTIFY THE FOLLOWING:
1. I (WE) CERTIFY THAT THE NUMBER SHOWN ON THIS FORM IS MY (OUR) CORRECT TAX
IDENTIFICATION NUMBER.
2. I (WE) AM NOT (ARE NOT) SUBJECT TO BACK-UP WITHHOLDING AS A RESULT OF A
FAILURE TO REPORT ALL INTEREST AND DIVIDENDS, OR THE INTERNAL REVENUE SERVICES
HAS NOTIFIED ME (US) THAT I (WE) AM (ARE) NO LONGER SUBJECT TO BACK-UP
WITHHOLDING.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISIONS OF
THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACK-UP
WITHHOLDING.
- ---------------------------------------------- -------------------------
SIGNATURE DATE
- --------------------------------------------------------------------------------
AND BACK-UP INDIVIDUAL (OR CUSTODIAN) DATE JOINT REGISTRATION, IF ANY
WITHHOLDING
--------------------------------------------------------------------
CORPORATE OFFICER, PARTNER, DATE TITLE
TRUSTEE, ETC.
--------------------------------------------------------------------
[ ] CHECK BOX IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE SUBJECT TO BACK-
UP WITHHOLDING.
================================================================================
Mail completed application forms to:
AMERICA ASIA ALLOCATION GROWTH FUND
P.O. BOX 5536
HAUPPAUGE, PA 11788-0132
For assistance call: (888) BUY-GROW or (888) 289-4769
For non U.S. investors call: (703) 847-6792
================================================================================
FOR NASD BROKER DEALER ONLY
||||||||||||||||||||||||||||||| |||||||||||||||||||||||
- ------------------------------- -----------------------
Firm Name Branch/Branch #
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- --------------------------------------------------------------
Branch Address
|||||||||||||||||||||||| ||||| |||||||||||- |||||||||||
- ----------------------- ---- ---------- -----------
City State Zip Code
|||||||||||||||| ||||||||||||||||||||| ||||||||||||||||||
- ---------------- --------------------- ------------------ ------------
Rep # Rep's Last Name Rep's First Name Phone number
--------------------------------------------
Rep's Address if different than Branch
<PAGE>
SAGE/TSO TRUST
AMERICA ASIA ALLOCATION GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 1998
- --------------------------------------------------------------------------------
This Statement of Additional Information dated January 1, 1998 is not a
prospectus but should be read in conjunction with the Prospectus describing
Class A Shares and Class D Shares of the America Asia Allocation Growth Fund
(the "Fund") dated January 1, 1998 . The Prospectus may be amended or
supplemented from time to time. No investment in shares should be made without
first reading the Prospectus. This Statement of Additional Information is
intended to provide additional information regarding the activities and
operations of the Fund, and should be read in conjunction with the Prospectus. A
copy of the Prospectus may be obtained without charge from SAGE/TSO Investment
Management L.P. (the "Adviser") at the address and telephone numbers below.
UNDERWRITER: ADVISER:
ADS Distributors, Inc. SAGE/TSO Investment Management L.P.
101 Main Street, Suite E 7799 Leesburg Pike, Suite 610
Safety Harbor, Florida 34695 Vienna, Virginia 22182
(888) 289-4769 (888) AAA-5876
(813) 725-8711 (703) 356-3720
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS STATEMENT OF ADDITIONAL INFORMATION
OR IN THE PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST OR ITS DISTRIBUTOR.
THE PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE TRUST
OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
<PAGE>
TABLE OF CONTENTS
Page
The Trust and the Fund.....................................................
The Greater Asia Region....................................................
Investment Policies and Techniques.........................................
American Depository Receipts............................................
Convertible Securities..................................................
Foreign Securities......................................................
Hedging and Derivatives.................................................
Repurchase Agreements...................................................
Loans of Portfolio Securities...........................................
Illiquid Securities.....................................................
Rule 144A Securities....................................................
Other Investments.......................................................
Investment Restrictions....................................................
Investment Advisory and Other Services
Investment Advisory Agreement...........................................
Administrator...........................................................
Underwriter.............................................................
Distributor.............................................................
Trustees and Officers......................................................
Principal Shareholders.....................................................
Net Asset Value............................................................
Taxes......................................................................
Federal Income Tax......................................................
Foreign Taxes...........................................................
Portfolio Transactions.....................................................
Performance Information
In General..............................................................
Total Return Calculation................................................
Yield Calculation.......................................................
Performance and Advertisements .........................................
Other Information
Shareholder Liability...................................................
Limitations on Trustees' Liability......................................
Legal Counsel...........................................................
Independent Accountants.................................................
Reports to Shareholders.................................................
Financial Statements.......................................................
i
<PAGE>
THE TRUST AND THE FUND
This Statement of Additional Information relates to America Asia Allocation
Growth Fund (the "Fund"), a separate series of SAGE/TSO Trust (the "Trust"), a
diversified, open-end management company established on February 9, 1996 under
Delaware law as a Delaware business trust. The Trust Instrument permits the
Trust to offer separate series of shares of beneficial interest. The Trust
currently is comprised of one series, which offers its shares through two
separate classes: Class A Shares and Class D Shares.
THE GREATER ASIA REGION
The Adviser believes that the rapidly growing economies in the Greater Asia
Region offer attractive opportunities for investment. The newly industrialized
nations of this region are in an earlier, more dynamic growth stage of their
development. The Adviser believes that continued growth opportunities exist due
to structural changes taking place throughout the region. The relaxation of
trade barriers and the freer movement of capital are increasing the flow of
commerce within the region and fostering economic independence. As capital
investment increases, many of the Greater Asian Region countries are developing
more efficient capital markets for investment.
The following countries in the Greater Asia Region are designated as emerging or
less developed countries: India, The Philippines, Indonesia, Singapore,
Malaysia, Taiwan, Thailand and China. Although there is no universally accepted
definition, a developing country is generally considered to be a country which
is in the initial stages of industrialization. In these countries, the Fund
effectively may invest through investment funds subject to the provisions of the
Investment Company Act of 1940 relating to the purchase of securities of
investment companies.
The Chinese, Hong Kong and Taiwanese stock markets are undergoing a period of
growth and change which may result in trading volatility and difficulties in the
settlement and recording of transactions, and in interpreting and applying the
relevant law and regulations. In particular, the securities industry in China is
not well developed. China has no securities laws of nationwide applicability.
China governmental actions can have a significant effect on the economic
conditions in the Greater Asia Region, which could adversely affect the value
and liquidity of the Fund's investments. Although the Chinese Government has
recently begun to institute economic reform policies, there can be no assurances
that it will continue to pursue such policies or, if it does, that such policies
will succeed.
China and certain of the other Greater Asia Region countries do not have
comprehensive systems of laws, although substantial changes have occurred in
China in this regard in recent years. The bankruptcy laws pertaining to state
enterprises have rarely been used and are untried in regard to an enterprise
with foreign shareholders. The uncertainties faced by foreign investors in China
are exacerbated by the fact that many laws, regulations and decrees of China are
not publicly available, but merely circulated internally. Similar risks exist in
other Greater Asia Region countries.
INVESTMENT POLICIES AND TECHNIQUES
The following supplements the information contained in the Prospectus for the
Fund regarding the permitted investments and risk factors and the investment
objective and policies of the Fund.
AMERICAN DEPOSITORY RECEIPTS
The Fund may invest in foreign securities by purchasing American Depository
Receipts ("ADRs"). These securities may not necessarily be denominated in the
same currency as the securities into which they may be converted. Generally,
ADRs, in registered form, are denominated in U.S. dollars and are designed for
use in the U.S. securities markets. ADRs are receipts typically issued by a U.S.
bank or trust company evidencing ownership of the underlying securities. For
purposes of the Fund's investment policies, ADRs are deemed to have the same
classification as the underlying securities they represent. Thus, an ADR
representing ownership of common stock will be treated as common stock. ADR
facilities may be established as either "unsponsored" or "sponsored". While ADRs
issued under these two types of facilities are similar in some respects, there
are distinctions between them relating to the rights and obligations of ADR
holders and the practices of market participants.
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CONVERTIBLE SECURITIES
The Fund may invest in convertible securities. Common stock occupies the most
junior position in a company's capital structure. Convertible securities entitle
the holder to exchange such securities for a specified number of shares of
common stock, usually of the same company, at specified prices within a certain
period of time, and to receive interest or dividends until the holder elects to
convert. The provisions of any convertible security determine its ranking in a
company's capital structure. In the case of subordinated convertible debentures,
the holder's claims on assets and earnings are subordinated to the claims of
other creditors, and are senior to the claims of preferred and common
shareholders. In the case of preferred stock and convertible preferred stock,
the holder's claims on assets and earnings are subordinated to the claims of all
creditors but are senior to the claims of common shareholders.
To the extent that a convertible security's investment value is greater than its
conversion value, its price will be primarily a reflection of such investment
value, and its price will be likely to increase when interest rates fall and
decrease when interest rates rise, as is the case with a fixed-income security.
If the conversion value exceeds the investment value, the price of the
convertible security will rise above its investment value and, in addition, may
sell at some premium over its conversion value. At such times, the price of the
convertible security will tend to fluctuate directly with the price of the
underlying equity security.
FOREIGN SECURITIES
Investments in securities of foreign issuers may subject the Fund to investment
risks that differ in some respects from those related to investments in
obligations of U.S. domestic issuers. Such risks include future adverse
political and economic developments, the possible imposition of withholding
taxes on interest or other income, possible seizure, nationalization or
expropriation of foreign deposits, the possible establishment of exchange
controls or taxation at the source, greater fluctuations in value due to changes
in currency exchange rates, or the adoption of other foreign governmental
restrictions which might adversely affect the payment of principal and interest
on such obligations. Such investments may also have higher custodial fees and
sales commission than domestic investments. Foreign issuers of securities or
obligations are often subject to accounting treatment and engage in business
practices different from those regarding domestic issuers of similar securities
or obligations. Foreign branches of U.S. banks and foreign banks may be subject
to less stringent reserve requirements than those applicable to domestic
branches of U.S. banks. In addition, foreign markets may be characterized by
lower liquidity, greater price volatility, less regulation and higher
transaction costs than U.S. markets.
HEDGING AND DERIVATIVES
FUTURES TRANSACTIONS
Although the Fund may enter into futures transactions for the purchase or sale
for future delivery of securities, the Fund does not have the current intention
of doing so in the foreseeable future. While futures contracts provide for the
delivery of securities, deliveries usually do not occur. Contracts are generally
terminated by entering into offsetting transactions. The Fund may enter into
futures transactions on U.S. or foreign exchanges or boards of trade. In the
United States, futures exchanges and trading are regulated under the Commodity
Exchange Act by the Commodity Futures Trading Commission (CFTC), a U.S.
government agency.
The Fund may enter into such futures contracts to protect against the adverse
effects of fluctuations in security prices, or interest rates, without actually
buying or selling the securities underlying the contract. A stock index futures
contract obligates the seller to deliver (and the purchaser to take) an amount
of cash equal to a specific dollar amount times the difference between the value
of a specific stock index at the close of the last trading day of the contract
and the price at which the agreement was made.
With respect to options on futures contracts, when the Fund is temporarily not
fully invested, it may purchase a call option on a futures contract to hedge
against a market advance due to declining interest rates. The purchase of a call
option on a futures contract is similar in some respects to the purchase of a
call option on an individual security. Depending on the pricing of the option
compared to either the price of the futures contract upon which it is based, or
the price of the underlying debt securities, it may or may not be less risky
than ownership of the futures contract or underlying debt securities.
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The writing of a call option on a futures contract constitutes a partial hedge
against the declining price of the security or foreign currency which is
deliverable upon exercise of the futures contract. The writing of a put option
on a futures contract constitutes a partial hedge against the increasing price
of the security or foreign currency which is deliverable upon exercise of the
futures contract.
To the extent that market prices move in an unexpected direction, the Fund may
not achieve the anticipated benefits of futures contracts or options on futures
contracts or may realize a loss. Further, with respect to options on futures
contracts, the Fund may seek to close out an option position by writing or
buying an offsetting position covering the same securities or contracts and have
the same exercise price and expiration date. The ability to establish and close
out positions on options will be subject to the maintenance of a liquid
secondary market, which cannot be assured.
RESTRICTIONS ON THE USE OF FUTURES CONTRACTS
The Fund may enter into futures contracts provided that such obligations
represent no more than 15% of the Fund's net assets. Under the Commodity
Exchange Act, the Fund may enter into futures transactions for hedging purposes
without regard to the percentage of assets committed to initial margin and for
other than hedging purposes provided that assets committed to initial margin do
not exceed 5% of the Fund's net assets. To the extent required by law, the Fund
will set aside cash and appropriate liquid assets in a segregated account to
cover its obligations related to futures contracts.
FOREIGN CURRENCY HEDGING STRATEGIES -- SPECIAL CONSIDERATIONS
Although the Fund may use options and futures on foreign currencies and forward
currency contracts to hedge against movements in the values of the foreign
currencies in which the Fund's securities are denominated, the Fund does not
currently intend to use such hedging strategies in the foreseeable future. Such
currency hedges can protect against price movements in a security the Fund owns
or intends to acquire that are attributable to changes in the value of the
currency in which it is denominated. Such hedges do not, however, protect
against price movements in the securities that are attributable to other causes.
The value of hedging instruments on foreign currencies depends on the value of
the underlying currency relative to the U.S. dollar. Because foreign currency
transactions occurring in the interbank market might involve substantially
larger amounts than those involved in the use of such hedging instruments, the
Fund could be disadvantaged by having to deal in the odd lot market (generally
consisting of transactions of less than $1 million) for the underlying foreign
currencies at prices that are less favorable than for round lots.
The Fund might seek to hedge against changes in the value of a particular
currency when no hedging instruments on that currency are available or such
hedging instruments are more expensive than certain other hedging instruments.
In such cases, the Fund may hedge against price movements in that currency by
entering into transactions using hedging instruments on other currencies, the
values of which the Adviser believes will have a high degree of positive
correlation to the value of the currency being hedged. The risk that movements
in the price of the hedging instrument will not correlate perfectly with
movements in the price of the currency being hedged is magnified when this
strategy is used.
Settlement of hedging transactions involving foreign currencies might be
required to take place within the country issuing the underlying currency. Thus,
the Fund might be required to accept or make delivery of the underlying foreign
currency in accordance with any U.S. or foreign regulations regarding the
maintenance of foreign banking arrangements by U.S. residents and might be
required to pay any fees, taxes and charges associated with such delivery
assessed in the issuing country.
FORWARD CURRENCY CONTRACTS
A forward currency contract involves an obligation to purchase or sell a
specific currency at a specified future date, which may be any fixed number of
days from the contract date agreed upon by the parties, at a price set at the
time the contract is entered into.
The Fund may enter into forward currency contracts to purchase or sell foreign
currencies for a fixed amount of U.S. dollars or another foreign currency. The
Fund also may use forward currency contracts for "cross-hedging." Under
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this strategy, the Fund would increase its exposure to foreign currencies that
the Adviser believes might rise in value relative to the U.S. dollar, or the
Fund would shift its exposure to foreign currency fluctuations from one country
to another.
As is the case with futures contracts, holders and writers of forward currency
contracts can enter into offsetting closing transactions, similar to closing
transactions on futures, by selling or purchasing, respectively, an instrument
identical to the instrument held or written. Secondary markets generally do not
exist for forward currency contracts, with the result that closing transactions
generally can be made for forward currency contracts only by negotiating
directly with the contra party. Thus, there can be no assurance that the Fund
will in fact be able to close out a forward currency contract at a favorable
price prior to maturity. In addition, in the event of insolvency of the contra
party, the Fund might be unable to close out a forward currency contract at any
time prior to maturity. In either event, the Fund would continue to be subject
to market risk with respect to the position, and would continue to be required
to maintain a position in securities denominated in the foreign currency or to
maintain cash or securities in a segregated account.
The precise matching of forward currency contracts amounts and the value of the
securities involved generally will not be possible because the value of such
securities, measured in the foreign currency, will change after the foreign
currency contract has been established. Thus, the Fund might need to purchase or
sell foreign currencies in the spot (cash) market to the extent such foreign
currencies are not covered by forward contracts. The projection of short-term
currency market movements is extremely difficult, and the successful execution
of a short-term hedging strategy is highly uncertain.
LIMITATIONS ON THE USE OF FORWARD CURRENCY CONTRACTS
The Fund may enter into forward currency contracts or maintain a net exposure to
such contracts only if (1) the consummation of the contracts would not obligate
the Fund to deliver an amount of foreign currency in excess of the value of its
portfolio securities or other assets denominated in that currency, or (2) the
Fund maintains cash, U.S. government securities or liquid, high-grade debt
securities in a segregated account in an amount not less than the value of its
total assets committed to the consummation of the contract and not covered as
provided in (1) above, as marked to market daily.
OPTIONS
The Fund may buy put and call options and write covered call and secured put
options but has no current intention of actively engaging in such transactions.
Such options may relate to particular securities, stock indices, or financial
instruments and may or may not be listed on a national securities exchange and
issued by the Options Clearing Corporation. Options trading is a highly
specialized activity which entails greater than ordinary investment risk.
Options on particular securities may be more volatile than the underlying
securities, and therefore, on a percentage basis, an investment in options may
be subject to greater fluctuation than an investment in the underlying
securities themselves.
The Fund will write call options only if they are "covered." In the case of a
call option on a security, the option is "covered" if the Fund owns the security
underlying the call or has an absolute and immediate right to acquire that
security without additional cash consideration (or, if additional cash
consideration is required, liquid assets, such as cash, U.S. Government
securities or other liquid high grade debt obligations, in such amount held in a
segregated account by its custodian) upon conversion or exchange of other
securities held by it. Unless a closing purchase transaction is effected, the
Fund would be required to continue to hold a security which it might otherwise
wish to sell or deliver a security it would want to hold. The exercise price of
a call option may be below, equal to or above the current market value of the
underlying security at the time the option is written. For a call option on an
index, the option is covered if the Fund maintains with its custodian a
diversified stock portfolio, or liquid assets equal to the contract value. A
call option is also covered if the Fund holds a call on the same security or
index as the call written where the exercise price of the call held is (i) equal
to or less than the exercise price of the call written; or (ii) greater than the
exercise price of the call written provided the difference is maintained by the
Fund in liquid assets such as cash, U.S. government securities and other
high-grade debt obligations in a segregated account with its custodian. The Fund
will write put options only if they are "secured" by liquid assets maintained in
a segregated account by the Fund's custodian in an amount not less than the
exercise price of the option at all times during the option period.
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PURCHASING CALL OPTIONS
The Fund may purchase call options to the extent that premiums paid by the Fund
do not aggregate more than 10% of the Fund's total assets. When the Fund
purchases a call option, in return for a premium paid by the Fund to the writer
of the option, the Fund obtains the right to buy the security underlying the
option at a specified exercise price at any time during the term of the option.
The writer of the call option, who receives the premium upon writing the option,
has the obligation, upon exercise of the option, to deliver the underlying
security against payment of the exercise price. The advantage of purchasing call
options is that the Fund may alter portfolio characteristics and modify
portfolio maturities without incurring the cost associated with transactions.
The Fund may, following the purchase of a call option, liquidate its position by
effecting a closing sale transaction. This is accomplished by selling an option
of the same series as the option previously purchased. The Fund will realize a
profit from a closing sale transaction if the price received on the transaction
is more than the premium paid to purchase the original call option; the Fund
will realize a loss from a closing sale transaction if the price received on the
transaction is less than the premium paid to purchase the original call option.
Although the Fund will generally purchase only those call options for which
there appears to be an active secondary market, there is no assurance that a
liquid secondary market on an Exchange will exist for any particular option, or
at any particular time, and for some options no secondary market on an Exchange
may exist. In such event, it may not be possible to effect closing transactions
in particular options, with the result that the Fund would have to exercise its
options in order to realize any profit and would incur brokerage commissions
upon the exercise of such options and upon the subsequent disposition of the
underlying securities acquired through the exercise of such options. Further,
unless the price of the underlying security changes sufficiently, a call option
purchased by the Fund may expire without any value to the Fund, in which event
the Fund would realize a capital loss which will be short-term unless the option
was held for more than one year.
COVERED CALL WRITING
Although the Fund may write covered call options from time to time on portions
of its portfolio, the Fund does not have the current intention of doing so in
the foreseeable future. The Fund may write covered call options, without limit,
as the Adviser determines is appropriate in pursuing the Fund's investment
objective. The advantage to the Fund of writing covered calls is that the Fund
receives a premium which is additional income. However, if the security rises in
value, the Fund may not fully participate in the market appreciation. The Fund's
obligation under a covered call option is terminated upon the expiration of the
option or upon entering a closing purchase transaction. In a closing purchase
transaction, the Fund, as writer of an option, terminates its obligation by
purchasing an option of the same series as the option previously written.
Closing purchase transactions will ordinarily be effected to realize a profit on
an outstanding call option, to prevent an underlying security from being called,
to permit the sale of the underlying security or to enable the Fund to write
another call option on the underlying security with either a different exercise
price or expiration date or both. The Fund may realize a net gain or loss from a
closing purchase transaction depending upon whether the net amount of the
original premium received on the call option is more or less than the cost of
effecting the closing purchase transaction. Any loss incurred in a closing
purchase transaction may be partially or entirely offset by the premium received
from a sale of a different call option on the same underlying security. Such a
loss may also be wholly or partially offset by unrealized appreciation in the
market value of the underlying security. Conversely, a gain resulting from a
closing purchase transaction could be offset in whole or in part by a decline in
the market value of the underlying security.
During the option period, a covered call option writer may be assigned an
exercise notice by the broker-dealer through whom such call option was sold,
requiring the writer to deliver the underlying security against payment of the
exercise price. A closing purchase transaction cannot be effected with respect
to an option once the option writer has received an exercise notice for such
option.
PURCHASING PUT OPTIONS
Although the Fund may invest up to 10% of its total assets in the purchase of
put options, the Fund does not have the current intention of doing so in the
foreseeable future. The Fund will, at all times during which it holds a put
option, own the security covered by such option. With regard to the writing of
put options, the Fund will limit the aggregate
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value of the obligations underlying such put options to 50% of its total net
assets. The purchase of the put on substantially identical securities held will
constitute a short sale for tax purposes, the effect of which is to create
short-term capital gain on the sale of the security and to suspend running of
its holding period (and treat it as commencing on the date of the closing of the
short sale) or that of a security acquired to cover the same if at the time the
put was acquired, the security had not been held for more than one year.
A put option purchased by the Fund gives it the right to sell one of its
securities for an agreed price up to an agreed date. The Fund intends to
purchase put options in order to protect against a decline in the market value
of the underlying security below the exercise price less the premium paid for
the option ("protective puts"). The Fund may sell a put option which it has
previously purchased prior to the sale of the securities underlying such option.
Such sale will result in a net gain or loss depending on whether the amount
received on the sale is more or less than the premium and other transaction
costs paid on the put option which is sold. The Fund may sell a put option
purchased on individual portfolio securities. Additionally, the Fund may enter
into closing sale transactions. A closing sale transaction is one in which the
Fund, when it is the holder of an outstanding option, liquidate its position by
selling an option of the same series as the option previously purchased.
WRITING PUT OPTIONS
Although the Fund may also write put options on a secured basis, the Fund does
not have the current intention of doing so in the foreseeable future. Writing
put options on a secured basis means that the Fund will maintain in a segregated
account with its custodian, cash or U.S. Government securities in an amount not
less than the exercise price of the option at all times during the option
period. The amount of cash or U.S. Government securities held in the segregated
account will be adjusted on a daily basis to reflect changes in the market value
of the securities covered by the put option written by the Fund. Secured put
options will generally be written in circumstances where the Adviser wishes to
purchase the underlying security for the Fund's portfolio at a price lower than
the current market price of the security.
FOREIGN CURRENCY TRANSACTIONS
Although the Fund values its assets daily in U.S. dollars, it is not required to
convert its holdings of foreign currencies to U.S. dollars on a daily basis. The
Fund's foreign currencies generally will be held as "foreign currency call
accounts" at foreign branches of foreign or domestic banks. These accounts bear
interest at negotiated rates and are payable upon relatively short demand
periods. If a bank became insolvent, the Fund could suffer a loss of some or all
of the amounts deposited. The Fund may convert foreign currency to U.S. dollars
from time to time. Although foreign exchange dealers generally do not charge a
stated commission or fee for conversion, the prices posted generally include a
"spread", which is the difference between the prices at which the dealers are
buying and selling foreign currencies.
REPURCHASE AGREEMENTS
The repurchase price under the repurchase agreements described in the Prospectus
generally equals the price paid by the Fund plus interest negotiated on the
basis of current short-term rates (which may be more or less than the rate on
the securities underlying the repurchase agreement). Repurchase agreements may
be considered to be loans by the Fund under the Investment Company Act of 1940,
as amended (the "1940 Act").
The financial institutions with whom the Fund may enter into repurchase
agreements are banks and non-bank dealers of U.S. government securities that are
listed on the Federal Reserve Bank of New York's list of reporting dealers and
banks, if such banks and non-bank dealers are deemed creditworthy by the
Adviser. The Adviser will continue to monitor the creditworthiness of the seller
under a repurchase agreement, and will require the seller to maintain during the
term of the agreement the value of the securities subject to the agreement at
not less than the repurchase price. The Fund will only enter into a repurchase
agreement where the market value of the underlying security, including interest
accrued, will at all times be equal to or exceed the value of the repurchase
agreement.
The Fund may invest in repurchase agreements with foreign parties or a
repurchase agreement based on securities denominated in foreign currencies.
Legal structures in foreign countries, including bankruptcy laws, may offer less
protection to investors such as the Fund. Furthermore, foreign repurchase
agreements generally involve greater risks than repurchase agreements made in
the United States.
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LOANS OF PORTFOLIO SECURITIES
The Fund may lend portfolio securities to broker-dealers and financial
institutions provided that (1) the loan is secured continuously by collateral
marked-to-market daily, and maintained in an amount at least equal to the
current market value of the securities loaned; (2) the Fund may call the loan at
any time and receive the securities loaned; (3) the Fund will receive any
interest or dividends paid on the loaned securities and (4) the aggregate market
value of securities loaned by the Fund will not at any time exceed 33% of the
total assets of the Fund.
Collateral will consist of U.S. government securities, cash equivalents or
irrevocable letters of credit. Loans of securities involve a risk that the
borrower may fail to return the securities or may fail to maintain the proper
amount of collateral. Therefore, the Fund will only enter into portfolio loans
after a review by the Adviser, under the supervision of the Board of Trustees,
including a review of the creditworthiness of the borrower. Such reviews will be
monitored on an ongoing basis.
ILLIQUID SECURITIES
The Board of Trustees has delegated the function of making day-to-day
determinations of liquidity to the Adviser pursuant to guidelines reviewed by
the Board of Trustees. The Adviser will monitor the liquidity of securities held
by the Fund, and report periodically on such determinations to the Board of
Trustees.
RULE 144A SECURITIES
The Fund may invest in securities that are exempt from the registration
requirements of the Securities Act of 1933 pursuant to Securities Exchange
Commission ("SEC") Rule 144A. Those securities, purchased pursuant to Rule 144A,
are traded among qualified institutional buyers, and are subject to the Fund's
limitation on illiquid investments.
Investing in securities under Rule 144A could have the effect of increasing the
levels of the Fund's illiquidity to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing these securities. The Fund
will limit its investments in securities of issuers which the Fund is restricted
from selling to the public without registration under the Securities Act of 1933
to no more than 10% of the Fund's net assets, excluding restricted securities
eligible for resale pursuant to Rule 144A that have been determined to be liquid
by the Fund's Board of Trustees.
OTHER INVESTMENTS
Subject to prior disclosure to shareholders, the Board of Trustees may, in the
future, authorize the Fund to invest in securities other than those listed here
and in the prospectus, provided that such investment would be consistent with
the Fund's investment objective, and that it would not violate any fundamental
investment policies or restrictions applicable to the Fund.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental restrictions and may
not be changed without the approval of a majority of the outstanding voting
shares (as defined in the 1940 Act) of the Fund. Unless otherwise indicated, all
percentage limitations listed below apply only at the time of the transaction.
Accordingly, if a percentage restriction is adhered to at the time of
investment, a later increase or decrease in the percentage which results from a
relative change in values or from a change in the Fund's total assets will not
be considered a violation.
Except as set forth under "INVESTMENT OBJECTIVE AND POLICIES" and "DESCRIPTION
OF PERMITTED INVESTMENTS AND RISK FACTORS" in the Prospectus, the Fund may not:
1. purchase securities of any one issuer if, as a result,
more than 5% of the Fund's total assets would be
invested in securities of that issuer or the Fund would
own or hold more than 10% of the outstanding voting
securities of that issuer, except that up to 25% of the
Fund's total assets may be invested without regard to
this limitation, and except that this limit does not
apply to securities issued or guaranteed by the U.S.
government, its agencies and instrumentalities or to
securities issued by other investment companies;
2. purchase any security if, as a result of that purchase,
25% or more of the Fund's total assets
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would be invested in securities of issuers having their
principal business activities in the same industry,
except that this limitation does not apply to
securities issued or guaranteed by the U.S. government,
its agencies or instrumentalities;
3 issue senior securities or borrow money, except as
permitted under the 1940 Act and then not in excess of
331/3 of the Fund's total assets (including the amount
of the senior securities issued but reduced by any
liabilities not constituting senior securities) at the
time of the issuance or borrowing, except that the Fund
may borrow up to an additional 5% of its total assets
(not including the amount borrowed) for temporary or
emergency purposes. The Fund will not purchase
securities when borrowings exceed 5% of its total
assets;
4. make loans, except through loans of securities or
through repurchase agreements, provided that, for
purposes of this restriction, the acquisition of bonds,
debentures, other debt securities or instruments, or
participations or other interest therein and
investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or
similar instruments will not be considered the making
of a loan;
5. engage in the business of underwriting the securities
of others, except to the extent that the Fund might be
considered an underwriter under the Federal securities
laws in connection with its disposition of securities;
6. purchase or sell real estate, except that investments
in securities of issuers that invest in real estate or
other instruments supported by interests in real estate
are not subject to this limitation, and except that the
Fund may exercise rights under agreements relating to
such securities, including the right to enforce
security interests to hold real estate acquired by
reason of such enforcement until that real estate can
be liquidated in an orderly manner; or
7. purchase or sell physical commodities unless acquired
as a result of owning securities or other instruments,
but the Fund may purchase, sell or enter into financial
options and futures, forward and spot currency
contracts.
The following investment limitations are not fundamental and may be changed
without shareholder approval:
(i) The Fund does not currently intend to engage in short
sales of securities or maintain a short position,
except that the Fund may (a) sell short ("against the
box") and (b) maintain short positions in connection
with its use of financial options and futures, forward
and spot currency contracts or swap transactions.
(ii) The Fund does not currently intend to purchase
securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and
except that the Fund may make margin deposits in
connection with its use of financial options and
futures, forward and spot currency contracts or swap
transactions.
(iii) The Fund does not currently intend to purchase
securities of other investment companies except as
permitted by the 1940 Act and the rules and regulations
thereunder.
(iv) The Fund does not currently intend to invest in
companies for the purpose of exercising control or
management.
(v) The Fund does not currently intend to invest in oil,
gas or mineral exploration or development programs or
leases, except that investment in securities of issuers
that invest in such programs or leases and investments
in asset-backed securities supported by receivables
generated by such programs or leases are not subject to
this prohibition.
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(vi) The Fund does not currently intend to invest more
than 5% of its net assets in warrants, including
within that amount no more than 2% in warrants which
are not listed on the New York or American Stock
Exchanges, except warrants acquired as a result of
its holdings of common stocks.
(vii) The Fund does not currently intend to purchase or
retain the securities of any issuer if, to the
knowledge of the Fund, any officer or Trustee of the
Fund or of its investment manager owns beneficially
more than 1/2 of 1% of the outstanding securities of
such issuer, and such officers and Trustees of the
Fund or of its investment manager who own more than
1/2 of 1%, own in the aggregate more than 5% of the
outstanding securities of such issuer.
(viii) The Fund does not currently intend to invest more
than 10% of its total assets in securities of
companies less than three years old. Such three-year
period shall include the operation of any predecessor
company or companies. To comply with certain state
securities restrictions, the Fund will not invest
more than 5% of its total assets in securities of
such issuers; however, if these restrictions are
loosened, the Fund reserves the right to invest up to
10% of its total assets in securities of such issuers
without advance notice to shareholders.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISORY AGREEMENT
The Fund and the Adviser have entered into an investment advisory agreement (the
"Investment Advisory Agreement"). The Investment Advisory Agreement provides
that the Adviser shall not be protected against any liability to the Fund or its
shareholders by reason of willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or from reckless disregard of its
obligations or duties thereunder.
The Investment Advisory Agreement provides that if, for any fiscal year, any
ratio of expenses of the Fund (including amounts payable to the Adviser but
excluding interest, taxes, brokerage, litigation and other extraordinary
expenses) exceeds limitations established by any state in which the shares of
the Fund are registered, the Adviser will bear the amount of such excess.
If the Fund is registered in California, and to the extent that the Fund
purchases securities of open-end investment companies, the Adviser will waive
its advisory fee on that portion of the Fund's assets invested in such
securities.
For providing investment advisory services, the Fund pays the Adviser a monthly
fee which is calculated daily by applying an annual rate of 2.00% of the daily
net assets of the Fund. The Adviser has voluntarily agreed to waive all or a
portion of its fee and/or reimburse expenses of the Fund to limit net operating
expenses to an annual rate of not more than 2.75% of the Fund's average daily
net assets. For the period October 2, 1996 (commencement of operations) through
September 30, 1997, the Advisor agreed to waive advisory fees of $31,511 and
reimburse the Fund for expenses totaling $193,690.
The continuance of the Investment Advisory Agreement, after the first two years,
must be specifically approved at least annually (I) by the vote of the Trustees
or by a vote of the shareholders of the Fund, and (ii) by the vote of a majority
of the Trustees who are not parties to the Investment Advisory Agreement or
"interested persons" of any party thereto, cast in person at a meeting called
for the purpose of voting on such approval. The Investment Advisory Agreement
will terminate automatically in the event of its assignment, and is terminable
at any time without penalty by the Trustees of the Fund, or by a majority of the
outstanding shares of the Fund on not less than 30 days' nor more than 60 days'
written notice to the Adviser, or by the Adviser on 90 days' written notice to
the Fund.
ADMINISTRATOR
American Data Services, 150 Motor Parkway, Suite 109 Hauppauge, New York 11788
(the "ADS" or the Administrator") provides certain administrative
9
<PAGE>
services to the Fund pursuant to an Administrative Services Agreement.
Under the Administrative Services Agreement, the Administrator: (1) coordinates
with the Custodian and Transfer Agent and monitors the services they provide to
the Fund; (2) coordinates with and monitors any other third parties furnishing
services to the Fund; (3) provides the Fund with necessary office space,
telephones and other communications facilities and personnel competent to
perform administrative and clerical functions; (4) supervises the maintenance by
third parties of such books and records of the Fund as may be required by
applicable federal or state law; (5) prepares and, after approval by the Fund,
files and arranges for the distribution of proxy materials and periodic reports
to shareholders of the Fund as required by applicable law; (6) prepares and,
after approval by the Fund, arranges for the filing of such registration
statements and other documents with the SEC and other federal and state
regulatory authorities as may be required by applicable law; (7) reviews and
submits to the officers of the Fund for their approval invoices or other
requests for payment of the Fund's expenses and instructs the Custodian to issue
checks in payment thereof, and (8) takes such other action with respect to the
Fund as may be necessary in the opinion of the Administrator to perform its
duties under the agreement.
Pursuant to this Administrative Services Agreement, ADS receives an annual fee
of $18,000 or 0.12% of the average daily net assets of the Fund, whichever is
greater. For the period October 2, 1996 (commencement of operations) through
September 30, 1997, the Trust paid the former administrator FPS Services Inc.,
$63,463 for Administration fees.
UNDERWRITER
ADS Distributors, Inc., 101 Main Street, Suite E, Safety Harbor, Florida 34695,
has been engaged pursuant to an agreement for the limited purpose of acting as
underwriter to facilitate the registration of shares of the Fund under state
securities laws and to assist in the sale of shares.
DISTRIBUTOR
ADS Distributors, Inc. ("ADS Distributors"), also serves as the distributor
pursuant to a Distribution Agreement (the "Distribution Agreement") which
applies to Class A and Class D shares of the Fund.
Class A Shares and Class D Shares of the Fund are subject to separate
distribution plans (the "Distribution Plans") pursuant to Rule 12b-1 under the
1940 Act. As provided in the Distribution Plan for Class A Shares, the Fund will
pay an annual fee of 0.35% of the Fund's average daily net assets attributable
to Class A Shares, to ADS Distributors as compensation for its services. As
provided in the Distribution Plan for Class D Shares, the Fund will pay an
annual fee of 0.35% of the Fund's average daily net assets attributable to Class
D Shares, to ADS Distributors as compensation for its services. From this
amount, ADS Distributors may make payments to financial institutions and
intermediaries such as banks, savings and loan associations, insurance
companies, investment counselors and broker-dealers as compensation for
services, reimbursement of expenses incurred in connection with distribution
assistance or provision of shareholder services. The Distribution Plans are
characterized as compensation plans because the distribution fee will be paid to
ADS Distributors as distributor without regard to the distribution or
shareholder service expenses incurred by ADS Distributors or the amount of
payments made to financial institutions and intermediaries. The Fund intends to
operate the Distribution Plans in accordance with their terms and within the
rules of the National Association of Securities Dealers, Inc. concerning sales
charges. Pursuant to such rules, the Distributor is required to limit aggregate
initial sales charges and asset-based sales charges to 6.25% of total gross
sales of each class of shares.
The Distribution Plans will continue in effect from year to year, provided that
each such continuance is approved at least annually by a vote of the Board of
Trustees, including a majority vote of the members of the Trustees who are not
interested persons (as that term is defined in the 1940 Act) and have no direct
or indirect financial interest in the
10
<PAGE>
operation of the Distribution Plans of in any agreements related to the
Distribution Plans, (the "Rule 12b-1 Trustees") , cast in person at a meeting
called for the purpose of voting on such continuance. The Distribution Plans may
be terminated at any time, without penalty, by vote of a majority of the Rule
12b-1 Trustees or by vote of the holders of a majority of the outstanding shares
of the applicable class on not more than 60 days', nor less than 30 days'
written notice to any other party to the Distribution Plans. The Distribution
Plans may not be amended to increase materially the amounts to be spent for the
services described herein without approval by the shareholders of the applicable
class, and all material amendments are required to be approved by the Board of
Trustees. Each Distribution Plan will automatically terminate in the event of
its assignment. Pursuant to each Distribution Plan, the Board of Trustees will
review at least quarterly a written report of the distribution expenses incurred
on behalf of each class of shares of the Fund. The report will include an
itemization of the distribution expenses and the purpose of such expenditures.
For the period October 2, 1996 (commencement of operations) through September
30, 1997 the Fund reimbursed FPS Broker Services, Inc., as distributor, $5,515
for distribution costs incurred. All of costs were associated with the
distribution of the Class A and Class D Shares of the Fund.
TRUSTEES AND OFFICERS
Information pertaining to the Trustees and executive officers of the Fund is set
forth below.
<TABLE>
<CAPTION>
NAME AND ADDRESS Age POSITION PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- ---------------- --- -------- -------------------------------------------
<S> <C> <C> <C>
James C. Tso * 50 Chairman and Private investor; President and registered investment
8027 Leesburg President advisor of Strategic Investment Advisors since 1992; Prior
Pike, Suite 610 thereto, President of Capital Finance Group (1989-1992);
Vienna, VA 22182 Member of the Virginia State Bar Association since 1984;
and Independent Consultant to Capital area firms on
strategic planning and implementation focusing on
mergers, venture capital and corporate finance since
1981.
William L.Fang 46 Trustee Deputy General Counsel of the Edison Electric Institute
6838 Camus Place ("EEI") since 1996; Various other
Springfield, VA 22152 employment positions with EEI since 1982.
11
<PAGE>
NAME AND ADDRESS Age POSITION PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- ---------------- --- -------- -------------------------------------------
Patricia A. Shelton 46 Trustee President of PRAMM Consulting Group, Inc., a research,
11790 Great Owl Circle management consulting and marketing firm, since 1993.
Reston, VA 20194
Jason J. Ahn 34 Trustee Senior Manager LCI International since October 1997;
14201 Upper Ridge Ct. prior thereto, Manager, MCI 1994-1997; prior thereto,
Centerville, VA 20121 Manager, Hampton Hill 1992-1994.
COMPENSATION TABLE
TRUSTEES AND OFFICERS
AGGREGATE COMPENSATION TOTAL COMPENSATION FROM
FROM TRUST FOR TRUST AND FUND COMPLEX
NAME OF TRUSTEE FISCAL YEAR ENDED SEPTEMBER 30 PAID TO TRUSTEES1
- --------------- ------------------------------ -----------------
1997
------------
James C. Tso * $0 $0
William L. Fang $0 $0
Dr. Stuart S. Malawer** $0 $0
Dr. John N. Paden** $1,500 $1500
Patricia A. Shelton $1,500 $1500
Jason J. Ahn $0 $0
* This Trustee is considered an "Interested Person" of the Trust as defined under the 1940 Act.
** This Trustee resigned effective September 25, 1997.
1 This amount represents the aggregate amount of compensation paid to the
Trustees for service on the Board of Trustees for the calendar year
ending December 31, 1997.
</TABLE>
No officer or Trustee of the Trust who is also an officer or employee of the
Adviser receives any compensation from the Trust for services to the Trust. The
Trust pays each Trustee who is not affiliated with the Adviser a fee of $2,000
per year and reimburses each Trustee and officer for out-of-pocket expenses in
connection with travel and attendance at Board meetings.
PRINCIPAL SHAREHOLDERS
[WILL BE UPDATED]
As of December 2, 1997, the officers and Trustees of the Trust, together as a
group, owned beneficially 60,422 shares (15%) of the Fund. As of December 2,
1997, the following persons owned of record or beneficially more than 5% of the
outstanding voting shares of each class and of the Fund:
12
<PAGE>
CLASS A
NAME & ADDRESS PERCENTAGE OF CLASS PERCENTAGE OF FUND
- -------------- ------------------- ------------------
Retirement Accounts & Co. 38.52% 6.51%
CUST Jon Ottilie
Denver, CO
Florence R. MacDonald 9.14% N/A
Hagerstown, MD
Margaret A. Cavanaugh 5.86% N/A
Arlington, VA
Retirement Accounts & Co. 5.78% N/A
FBO Ernest R Warner Jr.
Denver, CO
CLASS D
NAME & ADDRESS PERCENTAGE OF CLASS PERCENTAGE OF FUND
Semper Trust c/o Jim C. Tso 11.61% 9.65%
Reston, VA
Stemple Family Ltd. Partnership 8.93% 7.43%
White Stone, VA
James & Yvonne Tso 6.00% 5.02%
Reston, VA
Yvonne Tso 5.95% N/A
Reston, VA
Semper Trust c/o Harry L. Stemple 5.95% 5.07%
White Stone, VA
Semper Trust c/o George E. Fulcher 5.14% N/A
Annandale, VA
NET ASSET VALUE
The net asset value per share is calculated separately for Class A Shares and
Class D Shares of the Fund. The net asset value per share is computed by
dividing the net assets attributable to a class of shares by the total number of
outstanding shares for that class.
Each class of the Fund will bear, pro rata, all of the common expenses of the
Fund. The net asset value of all outstanding shares of each class will be
computed on a pro rata basis for each outstanding share based on the
proportionate participation in the Fund represented by the value of shares of
the class. All income earned and expenses incurred by the Fund will be borne on
a pro rata basis by each outstanding share of a class, based on each class'
percentage in the Fund represented by the value of such shares of such class.
Portfolio securities are valued and net asset value per share is determined as
of the close of regular trading on the New York Stock Exchange ("NYSE") which
currently is 4:00 p.m. (Eastern Time), on each day the NYSE is open for trading.
The NYSE is open for trading every day except Saturdays, Sundays and the
following holidays: New Year's
13
<PAGE>
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
The calculation of the Fund's net asset values may not take place
contemporaneously with the determination of the prices of portfolio securities
held by the Fund. Events affecting the values of portfolio securities that occur
between the time their prices are determined and the close of the NYSE will not
be reflected in the Fund's calculation of net asset value unless the Board of
Trustees deems that the particular event would materially affect the net asset
value, in which case an adjustment will be made. Assets or liabilities initially
expressed in terms of foreign currencies are translated prior to the next
determination of the net asset value of the Fund's shares into U.S. dollars at
the prevailing market rates. The fair value of all other assets is added to the
value of securities to arrive at the total assets.
TAXES
The following is only a summary of certain federal tax considerations generally
affecting the Fund and its shareholders that are not described in the
Prospectus, and is not intended as a substitute for careful tax planning.
Shareholders are urged to consult their tax advisors with specific reference to
their own tax situations, including their state and local tax liabilities.
Non-U.S. investors should consult their tax advisors concerning the tax
consequences of ownership of shares of the Fund, including the possibility that
distributions may be subject to a 30% U. S. withholding tax.
FEDERAL INCOME TAX
The following discussion of federal income tax consequences is based on the Code
and the regulations issued thereunder as in effect on the date of this Statement
of Additional Information. New legislation, as well as administrative changes or
court decisions, may significantly change the conclusions expressed herein, and
may have a retroactive effect with respect to the transactions contemplated
herein.
The Fund qualifies and intends to continue to qualify as a "regulated investment
company" ("RIC") as defined under Subchapter M of the Code. By following such a
policy, the Fund expects to eliminate or reduce to a nominal amount the federal
income taxes to which it may be subject. In order to qualify for treatment as a
RIC under the Code, the Fund generally must distribute annually to its
shareholders at least 90% of its investment company taxable income (generally,
net investment income plus net short-term capital gain) (the "Distribution
Requirement") and also must meet several additional requirements. Among these
requirements are the following: (i) at least 90% of the Fund's gross income each
taxable year must be derived from dividends, interest, payments with respect to
securities loans, and gains from the sale or other disposition of stock or
securities, or certain other income; (ii) at the close of each quarter of the
Fund's taxable year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. Government securities, securities of
other RlCs and other securities, with such other securities limited, in respect
to any one issuer, to an amount that does not exceed 5% of the value of the
Fund's assets and that does not represent more than 10% of the outstanding
voting securities of such issuer and (iii ) at the close of each quarter of the
Fund's taxable year, not more than 25% of the value of its assets may be
invested in securities (other than U.S. Government securities or the securities
of other RlCs) of any one issuer or of two or more issuers which the Fund
controls and which are engaged in the same, similar or related trades or
businesses. Notwithstanding the Distribution Requirement described above, which
requires only that the Fund distribute at least 90% of its annual investment
company taxable income and does not require any minimum distribution of net
capital gain (the excess of net long-term capital gain over net short-term
capital loss), the Fund will be subject to a nondeductible 4% federal excise tax
to the extent that it fails to distribute by the end of any calendar year 98% of
its ordinary income for that year and 98% of its capital gain net income (the
excess of short- and long-term capital gains over short- and long-term capital
losses) for the one-year period ending on October 31 of that year, plus certain
other amounts. The Fund intends to make sufficient distributions of its ordinary
income and capital gain net income prior to the end of each calendar year to
avoid liability for federal excise tax.
Any gain or loss recognized on a sale, redemption or exchange of shares of the
Fund by a non-exempt shareholder who is not a dealer in securities generally
will be treated as a long-term capital gain or loss if the shares have been held
for more than twelve months and otherwise generally will be treated as a
short-term capital gain or loss. If shares of the
14
<PAGE>
Fund on which a net capital gain distribution has been received are subsequently
sold, redeemed or exchanged and such shares have been held for six months or
less, any loss recognized will be treated as a long-term capital loss to the
extent of the long-term capital gain distribution.
In certain cases, the Fund will be required to withhold, and remit to the U. S.
Treasury, 31% of any distributions paid to a shareholder who (1) has failed to
provide a correct taxpayer identification number, (2) is subject to backup
withholding by the Internal Revenue Service or (3) has not certified to the Fund
that such shareholder is not subject to backup withholding.
If the Fund fails to qualify as a RIC for any taxable year, it will be subject
to tax on its taxable income at regular corporate rates. In such an event, all
distributions from the Fund generally would be eligible for the corporate
dividend received deduction for corporate shareholders.
FOREIGN TAXES
Foreign governments may withhold taxes from dividends or interest paid with
respect to foreign securities typically at a rate between 10% and 35%. Tax
conversions between certain countries and the United States may reduce or
eliminate such taxes. The Fund intends to elect to pass-through foreign taxes
paid in order for a shareholder to take a credit or deduction if, at the close
of its fiscal year, more than 50% of the Fund's total assets are invested in
securities of foreign issuers.
PORTFOLIO TRANSACTIONS
The Fund does not have an obligation to deal with any broker-dealer or group of
broker-dealers in the execution of transactions in portfolio securities. Subject
to policies established by the Trustees, the Adviser is responsible for placing
the orders to execute transactions for the Fund. In placing orders, it is the
policy of the Fund to seek to obtain the best net results taking into account
such factors as price (including the applicable dealer spread), the size, type
and difficulty of the transaction involved, the firm's general execution and
operational facilities, and the firm's risk in positioning the securities
involved. While the Adviser generally seeks reasonably competitive spreads, the
Fund will not necessarily be paying the lowest spread available.
It is not the Fund's practice to allocate brokerage or principal business on the
basis of sales of its shares which may be made through brokers or dealers.
However, the Adviser may place portfolio orders with qualified broker-dealers
who recommend the Fund to clients, and may, when a number of brokers and dealers
can provide best net results on a particular transaction, consider such
recommendations by a broker or dealer in selecting among broker-dealers.
PERFORMANCE INFORMATION
IN GENERAL
From time to time, the Fund may include general comparative information, such as
statistical data regarding inflation, securities indices or the features or
performance of alternative investments, in advertisements, sales literature and
reports to shareholders. The Fund may also include calculations, such as
hypothetical compounding examples or tax-free compounding examples, which
describe hypothetical investment results in such communications. Such
performance examples will be based on an express set of assumptions and are not
indicative of the performance of the Fund.
From time to time, the yield and total return of the Fund may be quoted in
advertisements, shareholder reports or other communications to shareholders.
Performance information will be calculated for Class A Shares and Class D Shares
of the Fund and will vary due to the effect of expense ratios on the performance
calculations.
TOTAL RETURN CALCULATION
The Fund computes average annual total return by determining the average annual
compounded rate of return during specified periods that equate the initial
amount invested to the ending redeemable value of such investment. This is done
by dividing the ending redeemable value of a hypothetical $1,000 initial payment
by $1,000 and raising the quotient to a power equal to one divided by the number
of years (or fractional portion thereof) covered by the computation and
subtracting one from the result. This calculation can be expressed as follows:
15
<PAGE>
ERV = P (1 + T)n
Where: ERV = ending redeemable value at the end of the period covered
by the computation of a hypothetical $1,000 payment made at
the beginning of the period.
P = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in terms of years.
T = average annual total return.
The Fund computes the aggregate total return by determining the aggregate
compounded rate of return during specified period that likewise equate the
initial amount invested to the ending redeemable value of such investment. The
formula for calculating aggregate total return is as follows:
Aggregate Total Return = [ ERV - 1 ]
---
P
Where: ERV = ending redeemable value at the end of the period covered by
the computation of a hypothetical $1,000 payment made at the
beginning of the period.
P = hypothetical initial payment of $1,000.
The calculations of average annual total return and aggregate total return
assume the reinvestment of all dividends and capital gain distributions on the
reinvestment dates during the period. The ending redeemable value (variable
"ERV" in each formula) is determined by assuming complete redemption of the
hypothetical investment and the deduction of all nonrecurring charges at the end
of the period covered by the computations.
Since performance will fluctuate, performance data for the Fund should not be
used to compare an investment in the Fund's shares with bank deposits, savings
accounts and similar investment alternatives which often provide an agreed-upon
or guaranteed fixed yield for a stated period of time. Shareholders should
remember that performance is generally a function of the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses and
market conditions.
YIELD CALCULATION
Yield, in its simplest form, is the ratio of income per share derived from the
Fund's investments to a current maximum offering price expressed in terms of a
percentage. The yield is quoted on the basis of earnings after expenses have
been deducted. The yield of the Fund is calculated by dividing the net
investment income per share earned during a 30-day (or one month) period by the
maximum offering price per share on the last day of the period and annualizing
the result. The Fund's net investment income per share earned during the period
is based on the average daily number of shares outstanding during the period
entitled to receive dividends and includes dividends and interest earned during
the period minus expenses accrued for the period, net of reimbursements. This
calculation can be expressed as follows:
6
YIELD = 2 [ ( a - b + 1) - 1 ]
------
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
16
<PAGE>
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = maximum offering price per share on the last day of the period.
For the purpose of determining net investment income earned during the period
(variable "a" in the formula), dividend income on equity securities held by the
Fund is recognized by accruing 1/360 of the stated dividend rate of the security
each day that the security is in the Fund. Except as noted below, interest
earned on any debt obligations held by the Fund is calculated by computing the
yield to maturity of each obligation held by the Fund based on the market value
of the obligation (including actual accrued interest) at the close of business
on the last business day of the month, the purchase price (plus actual accrued
interest) and dividing the result by 360 and multiplying the quotient by the
market value of the obligation (including actual accrued interest) in order to
determine the interest income on the obligation for each day of the subsequent
month that the obligation is held by the Fund. For purposes of this calculation,
it is assumed that each month contains 30 days. The date on which the obligation
reasonably may be expected to be called or, if none, the maturity date. With
respect to debt obligations purchased at a discount or premium, the formula
generally calls for amortization of the discount or premium. The amortization
schedule will be adjusted monthly to reflect changes in the market values of
such debt obligations.
Expenses accrued for the period (variable "b" in the formula) include all
recurring fees charged by the Fund to all shareholder accounts in proportion to
the length of the base period and the Fund's mean (or median) account size.
Undeclared earned income will be subtracted from the offering price per capital
share (variable "d" in the formula).
PERFORMANCE AND ADVERTISEMENTS
From time to time, in marketing and other fund literature, the Fund's
performance may be compared to the performance of other mutual funds in general
or to the performance of particular types of mutual funds with similar
investment goals, as tracked by independent organizations. Among these
organizations, Lipper Analytical Services, Inc. ("Lipper"), a widely used
independent research firm which ranks mutual funds by overall performance,
investment objectives and assets, may be cited. Lipper performance figures are
based on changes in net asset value, with all income and capital gains dividends
reinvested. Such calculations do not include the effect of any sales charges
imposed by other funds. The Fund will be compared to Lipper's appropriate fund
category, that is, by fund objective and portfolio holdings. The Fund's
performance may also be compared to the average performance of its Lipper
category.
The Fund's performance may also be compared to the performance of other mutual
funds by Morningstar, Inc. ("Morningstar") which ranks funds on the basis of
historical risk and total return. Morningstar's rankings range from five stars
(highest) to one star (lowest) and represent Morningstar's assessment of the
historical risk level and total return of a fund as a weighted average for
three, five and ten year periods. Ranks are not absolute or necessarily
predictive of future performance.
The Fund may compare its performance to a wide variety of indices including the
Japan, East Asia and Standard & Poor's 500 Indices.
In assessing such comparisons of yield, return or volatility, an investor should
keep in mind that the composition of the investments in the reported indices and
averages is not identical to those of the Fund, that the averages are generally
unmanaged, and that the items included in the calculations of such averages may
not be identical to the formula used by the Fund to calculate its figures.
Because certain of the Fund's investments are denominated in foreign currencies,
the strength or weakness of the U.S. dollar as against these currencies may
account for part of the Fund's investment performance. Historical information
regarding the value of the dollar versus foreign currencies may be used from
time to time in advertisements concerning the Fund.
17
<PAGE>
OTHER INFORMATION
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Delaware business
trust". Under Delaware law, shareholders of such a trust could, under certain
circumstances, be held personally liable as partners for the obligations of the
trust. Even if, however, the Fund were held to be a partnership, the possibility
of the shareholders incurring financial loss for that reason appears remote
because the Trust Instrument contains an express disclaimer of shareholder
liability for obligations of the Trust and requires that notice of such
disclaimer be given in each agreement, obligation or instrument entered into or
executed by or on behalf of the Trust or the Trustees, and because the Trust
Instrument provides for indemnification out of the Trust property for any
shareholder held personally liable for the obligations of the Trust.
LIMITATION OF TRUSTEES' LIABILITY
The Trust Instrument provides that a Trustee shall be liable only for his own
willful defaults and, if reasonable care has been exercised in the selection of
officers, agents, employees or investment advisers, shall not be liable for any
neglect or wrongdoing of any such person. The Trust Instrument also provides
that the Trust will indemnify its Trustees and officers against liabilities and
expenses incurred in connection with actual or threatened litigation in which
they may be involved because of their offices with the Trust unless it is
determined in the manner provided in the Trust Instrument that they have not
acted in good faith in the reasonable belief that their actions were in the best
interests of the Trust. However, nothing in the Trust Instrument shall protect
or indemnify a Trustee against any liability for his willful misfeasance, bad
faith, gross negligence or reckless disregard of his duties.
LEGAL COUNSEL
The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W.,
Washington, D.C. 20036-5891, counsel to the Fund, has passed upon the legality
of the shares offered by the Prospectus.
INDEPENDENT ACCOUNTANTS
Effective January 1, 1998, McCurdy & Associates CPA's, Inc., 27955, Clemens
Road, Westlake, Ohio 44145 serves as independent accountants for the Trust.
Prior thereto, Price Waterhouse LLP, 30 South Seventeenth Street, Philadelphia,
PA 19103, served as independent accountants for the Trust.
CUSTODIAN
Star Bank, 435 Walnut Street Cincinnati, Ohio 45202, is the custodian of the
Fund's assets pursuant to a custodian agreement. Under the custodian agreement,
Star Bank (i) maintains a separate account or accounts in the name of the Fund,
(ii) holds and transfers portfolio securities on account of the Fund, (iii)
accepts receipts and makes disbursements of money on behalf of the Fund, (iv)
collects and receives all income and other payments and distributions on account
of the Fund's securities and (v) makes periodic reports to the Board of
Directors concerning the Fund's operations.
REPORTS TO SHAREHOLDERS
Shareholders will receive unaudited semi-annual reports describing the Fund's
investment operations and annual financial statements audited by independent
certified public accountants. Inquiries regarding the Fund may be directed to
the Adviser at (888) AAA-5876.
FINANCIAL STATEMENTS
The financial statements incorporated by reference in this Statement of
Additional Information have been incorporated by reference in reliance on the
report of Price Waterhouse LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting, from the Fund's September
30, 1997 Annual Report to Shareholders.
18
<PAGE>
SAGE/TSO TRUST
FORM N-1A
PART C -- OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
--------------------------------
(a) Financial Statements.
Included in Part A: Audited Financial Highlights dated
September 30, 1997.
Incorporated by reference in Part B:
American Asia Allocation Growth Fund
(1) Schedule of Investments as of September 30, 1997 (audited).
(2) Statement of Assets and Liabilities at September 30, 1997
(audited).
(3) Statement of Operations for period October 2, 1996 through
September 30, 1997 (audited).
(4) Statement of Changes in Net Assets for the period October 2,
1996 through September 30, 1997 (audited).
(5) Financial Highlights (audited).
(6) Notes to Financial Statements dated September 30, 1997.
(7) Report of Independent Accountants
(b) Exhibits:
Exhibits filed pursuant to Form N-1A:
(1) Trust Instrument is incorporated by reference to
Registrant's Registration Statement as filed with the
Commission on March 26, 1996 ("Registration Statement").
(2) By-Laws are incorporated by reference to Registrant's
Registration Statement as filed with the Commission on March
26, 1996.
(3) Voting Trust Agreement -- None
(4) All Instruments Defining the Rights of Holders -- None
(5) Investment Advisory Contracts -- Investment Advisory
Agreement between Sage/Tso Trust and Sage/Tso Investment
Management L.P. is incorporated by reference to Registrant's
Registration Statement as filed with the Commission on June
26, 1996.
(6) Underwriting Agreement -- Form of Underwriting Agreement
between Sage/Tso Trust and ADS Distributors, Inc. is filed
herewith electronically.
(7) Bonus, Profit Sharing, Pension or Other Similar Contracts --
None
<PAGE>
(8) Custodian Agreements --
(a) Custody Agreement between Star Bank and Sage/Tso Trust
is filed herewith electronically.
(9) (a) Form of Transfer Agent Services Agreement -- Transfer
Agent Services Agreement between Sage/Tso Trust and
American Data Services is filed herewith electronically.
(b) Form of Administration Agreement -- Administration
Agreement between Sage/Tso Trust and American Data
Services is filed herewith electronically.
(C) Form of Accounting Services Agreement -- Accounting
Services Agreement betwee Sage/Tso Trust and American
Data Services is filed herewith electronically.
(10)(a) Opinion and Consent of Kirkpatrick & Lockhart LLP
regarding the legality of the securities being issued --
incorporated by reference to Registrant's Registration
Statement as filed with the Commission on June 26,
1996.
(11)(a) Consent of Independent Auditors -- Filed herewith
=
electronically.
(12) Financial Statements Omitted from Item 23. -- None
(13) Agreements or Understandings Made in Consideration for
Providing the Initial Capital -- incorporated by
reference to Registrant's Registration Statement as
filed with the Commission on June 26, 1996.
(14) Model Plan -- None
(15)(a) Plan of Distribution pursuant to Rule 12b-1 with respect
to Class A Shares -- incorporated by reference to
Registrant's Registration Statement as filed with the
Commission on June 26, 1996.
(b) Addendum to Distribution Plan pursuant to Rule 12b-1
with respect to Class A Shares -- is filed herewith
electronically.
(c) Plan of Distribution pursuant to Rule 12b-1 with respect
to Class D Shares -- incorporated by reference to
Registrant's Registration Statement as filed with the
Commission on June 26, 1996.
<PAGE>
(d) Addendum to Distribution Plan pursuant to Rule 12b-1
with respect to Class D Shares -- is filed herewith
electronically.
(16) Schedule for Computation of Performance Quotations --
None.
(17) Financial Data Schedule -- Filed herewith
electronically.
(18) Multiple Class Plan pursuant to Rule 18f-3 --
incorporated by reference to Registrant's Registration
Statement as filed with the Commission on June 26, 1996.
(19) Trustees' Powers of Attorney -- filed herewith
electronically
Item 25. Persons Controlled by or Under Common Control with Registrant.
-------------------------------------------------------------
None.
Item 26. Number of Holders of Securities as of December 2, 1997.
-------------------------------------------------------
Class A 29
Class D 109
Total 138
Item 27. Indemnification.
----------------
Reference is made to Article X of the Registrant's Trust Instrument.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of the Registrant by the Registrant pursuant to
the Trust's Trust Instrument, its By-Laws or otherwise, the Registrant
is aware that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed
in the Act and, therefore, is unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by trustees, officers
or controlling persons of the Registrant in connection with the
successful defense of any act, suit or proceeding) is asserted by such
trustees, officers or controlling persons in connection with shares
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issues.
Item 28. Business and Other Connections of Investment Adviser.
----------------------------------------------------
Sage/Tso Investment Management L.P., 8027 Leesburg Pike, Suite 610,
Vienna, VA 22182 provides investment advisory services to individual
and institutional investors, and as of December 2, 1997 had
approximately 10 million in assets under management.
For information as to any other business, vocation or employment of a
substantial nature in which each Trustee or officer of the
Registrant's investment adviser has been engaged for his own account
or in the capacity of Trustee, officer, employee, partner or trustee,
reference is made to Form ADV (File #801-40902) filed by it under the
Investment Advisers Act of 1940.
Item 29. Principal Underwriter.
----------------------
(a) ADS Distributors, Inc., the principal underwriter for the
Registrant's securities, currently acts as principal underwriter
for the following entities:
Amerindo Technology Fund
<PAGE>
Canandagua Funds
----------------
(b) The table below sets forth certain information as to the
Underwriter's Directors, Officers and Control Persons:
<TABLE>
<CAPTION>
POSITION POSITION AND
NAME AND PRINCIPAL AND OFFICES OFFICES WITH
BUSINESS ADDRESS WITH UNDERWRITER REGISTRANT
------------------------ ------------------------ ----------------
<S> <C> <C> <C>
Michael Miola Director and None
150 Motor Parkway Chief Financial Officer
Hauppauge, NY 11788-0132
Michael Rogan Director and President None
101 Main Street Suite E
Safety Harbor, FL 34695
Alan Rosenberg Vice President None
101 Main Street Suite E
Safety Harbor, FL 34695
Scott Waltkins Vice President None
101 Main Street Suite E
Safety Harbor, FL 34695
</TABLE>
<PAGE>
(C) Not Applicable
Item 30. Location of Accounts and Records.
All records described in Section 31(a) of the 1940 Act and the Rules
17 CFR 270.31a-1 to 31a-3 promulgated thereunder, are maintained by
the Trust's Investment Adviser, Sage/Tso Investment Management L.P.,
7797 Leesburg Pike, Suite 900, Falls Church, Virginia 22043, except
for those maintained by the Fund's Custodian, Star Bank 485 Walnut
St., Cincinnati, OH 45202 and the Trust's Administrator, Transfer
Agent and Fund Accounting Services Agent, American Data Services,
150 Motor Parkway Suite 109, Hauppauge, NY 11788.
Item 31. Management Services.
--------------------
There are no management-related service contracts not discussed in
Part A or Part B.
<PAGE>
Item 32. Undertakings.
-------------
(a) Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
Annual Report to Shareholders upon request and without charge.
(b) The Registrant hereby undertakes to promptly call a meeting of
shareholders for the purpose of voting upon the question of
removal of any director or directors when requested in writing
to do so by the record holders of not less than 10 percent of
the Registrant's outstanding shares and to assist its
shareholders in accordance with the requirements of Section
16(C) of the Investment Company Act of 1940 relating to
shareholder communications.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Falls Church, and Commonwealth of Virginia on the 30th day of December,
1997.
SAGE/TSO TRUST
---------------
Registrant
By /s/ James C. Tso
-------------------
James C. Tso
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement of Sage/Tso Trust has been signed below by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
- --------- -------- -----
<S> <C> <C>
/s/ James C. Tso President, Trustee and 12/30/97
- ---------------------- Principal Executive Officer
James C. Tso
/s/ William L. Fang Trustee, Secretary and Treasurer 12/30/97
- ----------------------
William L. Fang
/s/ Patricia A. Shelton Trustee 12/30/97
- ----------------------
Patricia A. Shelton
/s/ Jason J. Ahn Trustee 12/30/97
- ----------------------
Jason J. Ahn
/s/
- ----------------------
By Carolyn F. Mead , as 12/30/97
Attorney-in-Fact and Agent
pursuant to Power of Attorney
</TABLE>
<PAGE>
SAGE/TSO TRUST
INDEX TO EXHIBITS TO FORM N-1A
Exhibit Description
Number
99.B.6 Underwriting Agreement
99.B.8a Custody Agreement
99.B.9a Transfer Agent Services Agreement
99.B.9b Administration Agreement
99.B.9c Accounting Services Agreement
99.B.11a Consent of Independent Auditors
99.B.15b Addendum to 12b-1 Distribution Plan - Class A
99.B.15d Addendum to 12b-1 Distribution Plan - Class D
99.B.19 Trustee Power of Attorney
99.B.27 Financial Data Schedule on behalf of each Class
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0001010918
<NAME> SAGE/TSO TRUST
<SERIES>
<NUMBER> 1
<NAME> AMERICA ASIA ALLOCATION GROWTH FUND - CLASS A
<MULTIPLIER> 1
<CURRENCY> U.S Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-02-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 2207826
<INVESTMENTS-AT-VALUE> 2212334
<RECEIVABLES> 29723
<ASSETS-OTHER> 10005
<OTHER-ITEMS-ASSETS> 52042
<TOTAL-ASSETS> 2304104
<PAYABLE-FOR-SECURITIES> 181205
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 81145
<TOTAL-LIABILITIES> 262350
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2016969
<SHARES-COMMON-STOCK> 69683
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 20277
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4508
<NET-ASSETS> 2041754
<DIVIDEND-INCOME> 7920
<INTEREST-INCOME> 13786
<OTHER-INCOME> 0
<EXPENSES-NET> 43328
<NET-INVESTMENT-INCOME> (21622)
<REALIZED-GAINS-CURRENT> 41899
<APPREC-INCREASE-CURRENT> 4508
<NET-CHANGE-FROM-OPS> 24785
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 70021
<NUMBER-OF-SHARES-REDEEMED> 338
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1941754
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 31511
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 268529
<AVERAGE-NET-ASSETS> 224212
<PER-SHARE-NAV-BEGIN> 4.75
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> .35
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 5.05
<EXPENSE-RATIO> 2.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0001010918
<NAME> SAGE/TSO TRUST
<SERIES>
<NUMBER> 2
<NAME> AMERICA ASIA ALLOCATION GROWTH FUND - CLASS A
<MULTIPLIER> 1
<CURRENCY> U.S Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-02-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 2207826
<INVESTMENTS-AT-VALUE> 2212334
<RECEIVABLES> 29723
<ASSETS-OTHER> 10005
<OTHER-ITEMS-ASSETS> 52042
<TOTAL-ASSETS> 2304104
<PAYABLE-FOR-SECURITIES> 181205
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 81145
<TOTAL-LIABILITIES> 262350
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2016969
<SHARES-COMMON-STOCK> 314389
<SHARES-COMMON-PRIOR> 20000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 20277
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4508
<NET-ASSETS> 2041754
<DIVIDEND-INCOME> 7920
<INTEREST-INCOME> 13786
<OTHER-INCOME> 0
<EXPENSES-NET> 43328
<NET-INVESTMENT-INCOME> (21622)
<REALIZED-GAINS-CURRENT> 41899
<APPREC-INCREASE-CURRENT> 4508
<NET-CHANGE-FROM-OPS> 24785
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 336836
<NUMBER-OF-SHARES-REDEEMED> 22447
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1941754
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 31511
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 268529
<AVERAGE-NET-ASSETS> 1408365
<PER-SHARE-NAV-BEGIN> 5.00
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> .10
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 5.05
<EXPENSE-RATIO> 2.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
CUSTODY AGREEMENT
This agreement (the "Agreement") is entered into as of the _____ day of
___________, 1996 by and between America Asia Allocation Fund, (the "Fund"), an
open-end non-diversified investment business trust organized under the laws of
Delaware and having its office at 1462 Waterfront Road, Weston, Virginia 20194
and Star Bank, National Association, (the "Custodian"), a national banking
association having its principal office at 425 Walnut Street, Cincinnati, Ohio,
45202.
WHEREAS, the Fund and the Custodian desire to enter into this Agreement
to provide for the custody and safekeeping of the assets of the Fund as required
by the Investment Company Act of 1940, as amended (the "Act").
WHEREAS, the Fund hereby appoints the Custodian as custodian of all the
Fund's Securities and moneys at any time owned by the Fund during the term of
this Agreement (the "Fund Assets").
WHEREAS, the Custodian hereby accepts such appointment as Custodian and
agrees to perform the duties thereof as hereinafter set forth.
THEREFORE, in consideration of the mutual promises hereinafter set
forth, the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
The following words and phrases, when used in this Agreement, unless
the context otherwise requires, shall have the following meanings:
Authorized Person - the Chairman, President, Secretary, Treasurer,
Controller, or Senior Vice President of the Fund, or any other person, whether
or not any such person is an officer or employee of the Fund, duly authorized by
the Board of Trustees of the Fund to give Oral Instructions and Written
Instructions on behalf of the Fund, and listed in the Certificate annexed hereto
as Appendix A, or such other Certificate as may be received by the Custodian
from time to time.
Book-Entry System - the Federal Reserve Bank book-entry system for
United States Treasury securities and federal agency securities.
Depository - The Depository Trust Company ("DTC"), a limited purpose
trust company
1
<PAGE>
its successor(s) and its nominee(s) or any other person or clearing agent
Dividend and Transfer Agent - the dividend and transfer agent
appointed, from time to time, pursuant to a written agreement between the
dividend and transfer agent and the Fund
Foreign Securities - a) securities issued and sold primarily outside of
the United States by a foreign government, a national of any foreign country, or
a trust or other organization incorporated or organized under the laws of any
foreign country OR; b) securities issued or guaranteed by the government of the
United States, by any state, by any political subdivision or agency thereof, or
by any entity organized under the laws of the United States or of any state
thereof, which have been issued and sold primarily outside of the United States.
Money Market Security - debt obligations issued or guaranteed as to
principal and/or interest by the government of the United States or agencies or
instrumentalities thereof, commercial paper, obligations (including certificates
of deposit, bankers' acceptances, repurchase agreements and reverse repurchase
agreements with respect to the same), and time deposits of domestic banks and
thrift institutions whose deposits are insured by the Federal Deposit Insurance
Corporation, and short-term corporate obligations where the purchase and sale of
such securities normally require settlement in federal funds or their equivalent
on the same day as such purchase and sale, all of which mature in not more than
thirteen (13) months.
Officers - the Chairman, President, Secretary, Treasurer, Controller,
and Senior Vice President and/or Trustee of the Fund listed in the Certificate
annexed hereto as Appendix A, or such other Certificate as may be received by
the Custodian from time to time.
Oral Instructions - verbal instructions received by the Custodian from
an Authorized Person (or from a person that the Custodian reasonably believes in
good faith to be an Authorized Person) and confirmed by Written Instructions in
such a manner that such Written Instructions are received by the Custodian on
the business day immediately following receipt of such Oral Instructions.
Prospectus - the Fund's then currently effective prospectus and
Statement of Additional Information, as filed with and declared effective from
time to time by the Securities and Exchange Commission.
Security or Securities - Money Market Securities, common stock,
preferred stock, options, financial futures, bonds, notes, debentures, corporate
debt securities, mortgages, and any certificates, receipts, warrants, or other
instruments representing rights to receive, purchase, or subscribe for the same
or evidencing or representing any other rights or interest therein, or in any
property or assets.
Written Instructions - communication received in writing by the
Custodian from an Authorized Person.
2
<PAGE>
ARTICLE II
DOCUMENTS AND NOTICES TO BE FURNISHED BY THE FUND
A The following documents, including any amendments thereto, will be
provided contemporaneously with the execution of the Agreement, to the Custodian
by the Fund:
1. A copy of the Declaration of Trust of the Fund certified by
the Secretary.
2. A copy of the By-Laws of the Fund certified by the Secretary.
3. A copy of the resolution of the Board of Trustees of the Fund
appointing the Custodian, certified by the Secretary.
4. A copy of the then current Prospectus.
5. A Certificate of the President and Secretary of the Fund
setting forth the names and signatures of the Officers of the
Fund.
B. The Fund agrees to notify the Custodian in writing of the
appointment of any Dividend and Transfer Agent.
ARTICLE III
RECEIPT OF FUND ASSETS
A. During the term of this Agreement, the Fund will deliver or cause to
be delivered to the Custodian all moneys constituting Fund Assets. The Custodian
shall be entitled to reverse any deposits made on the Fund's behalf where such
deposits have been entered and moneys are not finally collected within 30 days
of the making of such entry.
B. During the term of this Agreement, the Fund will deliver or cause to
be delivered to the Custodian all Securities constituting Fund Assets. The
Custodian will not have any duties or responsibilities with respect to such
Securities until actually received by the Custodian.
C. As and when received, the Custodian shall deposit to the account(s)
of the Fund any and all payments for shares of the Fund issued or sold from time
to time as they are received from the Fund's distributor or Dividend and
Transfer Agent or from the Fund itself.
ARTICLE IV
DISBURSEMENT OF FUND ASSETS
A. The Fund shall furnish to the Custodian a copy of the resolution of
the Board of Trustees of the Fund, certified by the Fund's Secretary, either (i)
setting forth the date of the declaration of any dividend or distribution in
respect of shares of the Fund, the date of payment thereof, the record date as
of which Fund shareholders entitled to payment shall be determined, the amount
payable per share to Fund shareholders of record as of that date, and the total
amount to be paid by the Dividend and Transfer Agent on the payment date, OR
(ii) authorizing the declaration of dividends and distributions in respect of
shares of the Fund on a daily basis and authorizing the Custodian to rely on a
Certificate setting forth the date of the declaration of any such dividend or
distribution, the date of payment thereof, the record date as of which Fund
shareholders entitled to payment shall be determined, the amount payable per
share to Fund shareholders of record as of that date, and the total amount to be
paid by the Dividend and Transfer Agent on the payment date.
On the payment date specified in such resolution or Certificate
described above, the Custodian shall segregate such amounts from moneys held for
the account of the Fund so that they are available for such payment.
B. Upon receipt of Written Instructions so directing it, the Custodian
shall segregate amounts necessary for the payment of redemption proceeds to be
made by the Dividend and Transfer Agent from moneys held for the account of the
Fund so that they are available for such payment.
C. Upon receipt of a Certificate directing payment and setting forth
the name and address of the person to whom such payment is to be made, the
amount of such payment, and the purpose for which payment is to be made, the
Custodian shall disburse amounts as and when directed from the Fund Assets. The
Custodian is authorized to rely on such directions and shall be under no
obligation to inquire as to the propriety of such directions.
D. Upon receipt of a Certificate directing payment, the Custodian shall
disburse moneys from the Fund Assets in payment of the Custodian's fees and
expenses as provided in Article VIII hereof.
3
<PAGE>
ARTICLE V
CUSTODY OF FUND ASSETS
A. The Custodian shall open and maintain a separate bank account or
accounts in the United States in the name of the Fund, subject only to draft or
order by the Custodian acting pursuant to the terms of this Agreement, and shall
hold all cash received by it from or for the account of the Fund, other than
cash maintained by the Fund in a bank account established and used by the Fund
in accordance with Rule 17f-3 under the Act. Moneys held by the Custodian on
behalf of the Fund may be deposited by the Custodian to its credit as Custodian
in the banking department of the Custodian. Such moneys shall be deposited by
the Custodian in its capacity as such, and shall be withdrawable by the
Custodian only in such capacity.
B. The Custodian shall hold all Securities delivered to it in
safekeeping in a separate account or accounts maintained at Star Bank, N.A. for
the benefit of the Fund.
C. All Securities held which are issued or issuable only in bearer
form, shall be held by the Custodian in that form; all other Securities held for
the Fund shall be registered in the name of the Custodian or its nominee. The
Fund agrees to furnish to the Custodian appropriate instruments to enable the
Custodian to hold, or deliver in proper form for transfer, any Securities that
it may hold for the account of the Fund and which may, from time to time, be
registered in the name of the Fund.
D. With respect to all Securities held for the Fund , the Custodian
shall on a timely basis (concerning items 1 and 2 below, as defined in the
Custodian's Standards of Service Guide, as amended from time to time, annexed
hereto as Appendix C):
1.) Collect all income due and payable with respect to such
Securities;
2.) Present for payment and collect amounts payable upon all
Securities which may mature or be called, redeemed, or
retired, or otherwise become payable;
3.) Surrender Securities in temporary form for definitive
Securities; and
4.) Execute, as agent, any necessary declarations or certificates
of ownership under the Federal income tax laws or the laws or
regulations of any other taxing authority, including any
foreign taxing authority, now or hereafter in effect.
E. Upon receipt of a Certificate AND NOT OTHERWISE, the Custodian
shall:
1.) Execute and deliver to such persons as may be designated in
such Certificate proxies, consents, authorizations, and any
other instruments whereby the authority of the Fund as
beneficial owner of any Securities may be exercised;
2.) Deliver any Securities in exchange for other Securities or
cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation, or
recapitalization of any trust, or the exercise of any
conversion privilege;
3.) Deliver any Securities to any protective committee,
reorganization committee, or other person in connection with
the reorganization, refinancing, merger, consolidation,
recapitalization, or sale of assets of any trust, and receive
and hold under the terms of this Agreement such certificates
of deposit, interim receipts or other instruments or
documents as may
4
<PAGE>
be issued to it to evidence such delivery;
4.) Make such transfers or exchanges of the assets of the Fund
and take such other steps as shall be stated in said
Certificate to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund; and
5.) Deliver any Securities held for the Fund to the depository
agent for tender or other similar offers.
F. The Custodian shall promptly deliver to the Fund all notices, proxy
material and executed but unvoted proxies pertaining to shareholder meetings of
Securities held by the Fund. The Custodian shall not vote or authorize the
voting of any Securities or give any consent, waiver or approval with respect
thereto unless so directed by a Certificate or Written Instruction.
G. The Custodian shall promptly deliver to the Fund all information
received by the Custodian and pertaining to Securities held by the Fund with
respect to tender or exchange offers, calls for redemption or purchase, or
expiration of rights.
ARTICLE VI
PURCHASE AND SALE OF SECURITIES
A. Promptly after each purchase of Securities by the Fund, the Fund
shall deliver to the Custodian (i) with respect to each purchase of Securities
which are not Money Market Securities, Written Instructions, and (ii) with
respect to each purchase of Money Market Securities, Written Instructions or
Oral Instructions, specifying with respect to each such purchase the;
1.) name of the issuer and the title of the Securities,
2.) principal amount purchased and accrued interest, if
any,
3.) date of purchase and settlement,
4.) purchase price per unit,
5.) total amount payable, and
6.) name of the person from whom, or the broker through
which, the purchase was made.
The Custodian shall, against receipt of Securities purchased by or for the Fund,
pay out of the Fund Assets, the total amount payable to the person from whom or
the broker through which the purchase was made, provided that the same conforms
to the total amount payable as set forth in such Written Instructions or Oral
Instructions, as the case may be.
B. Promptly after each sale of Securities by the Fund, the Fund shall
deliver to the Custodian (i) with respect to each sale of Securities which are
not Money Market Securities, Written Instructions, and (ii) with respect to each
sale of Money Market Securities, Written Instructions or Oral Instructions,
specifying with respect to each such sale the;
1.) name of the issuer and the title of the Securities,
2.) principal amount sold and accrued interest, if any,
3.) date of sale and settlement,
4.) sale price per unit,
5
<PAGE>
5.) total amount receivable, and
6.) name of the person to whom, or the broker through
which, the sale was made.
The Custodian shall deliver the Securities against receipt of the total amount
receivable, provided that the same conforms to the total amount receivable as
set forth in such Written Instructions or Oral Instructions, as the case may be.
C. On contractual settlement date, the account of the Fund will be
charged for all purchased Securities settling on that day, regardless of whether
or not delivery is made. Likewise, on contractual settlement date, proceeds from
the sale of Securities settling that day will be credited to the account of the
Fund, irrespective of delivery.
D. Purchases and sales of Securities effected by the Custodian will be
made on a delivery versus payment basis. The Custodian may, in its sole
discretion, upon receipt of a Certificate, elect to settle a purchase or sale
transaction in some other manner, but only upon receipt of acceptable
indemnification from the Fund.
E. The Custodian shall, upon receipt of a Written Instructions so
directing it, establish and maintain a segregated account or accounts for and on
behalf of the Fund. Cash and/or Securities may be transferred into such account
or accounts for specific purposes, to-wit:
1.) in accordance with the provision of any agreement
among the Fund, the Custodian, and a broker-dealer
registered under the Securities and Exchange Act of
1934, as amended, and also a member of the National
Association of Securities Dealers (NASD) (or any
futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with
the rules of the Options Clearing Corporation and of
any registered national securities exchange, the
Commodity Futures Trading Commission, any registered
contract market, or any similar organization or
organizations requiring escrow or other similar
arrangements in connection with transactions by the
Fund;
2.) for purposes of segregating cash or government
securities in connection with options purchased,
sold, or written by the Fund or commodity futures
contracts or options thereon purchased or sold by the
Fund;
3.) for the purpose of compliance by the fund with the
procedures required for reverse repurchase
agreements, firm commitment agreements, standby
commitment agreements, and short sales by Act Release
No. 10666, or any subsequent release or releases or
rule of the Securities and Exchange Commission
relating to the maintenance of segregated accounts by
registered investment companies; and
4.) for other corporate purposes, ONLY IN THE CASE OF
THIS CLAUSE 4 upon receipt of a copy of a resolution
of the Board of Trustees of the Fund, certified by
the Secretary of the Fund, setting forth the purposes
of such segregated account.
F. Except as otherwise may be agreed upon by the parties hereto, the
Custodian shall not be required to comply with any Written Instructions to
settle the purchase of any Securities on behalf of the Fund unless there is
sufficient cash in the account(s) at the time or to settle the sale of
6
<PAGE>
any Securities from an account(s) unless such Securities are in deliverable
form. Notwithstanding the foregoing, if the purchase price of such Securities
exceeds the amount of cash in the account(s) at the time of such purchase, the
Custodian may, in its sole discretion, advance the amount of the difference in
order to settle the purchase of such Securities. The amount of any such advance
shall be deemed a loan from the Custodian to the Fund payable on demand and
bearing interest accruing from the date such loan is made up to but not
including the date such loan is repaid at a rate per annum customarily charged
by the Custodian on similar loans.
ARTICLE VII
FUND INDEBTEDNESS
In connection with any borrowings by the Fund, the Fund will cause to
be delivered to the Custodian by a bank or broker requiring Securities as
collateral for such borrowings (including the Custodian if the borrowing is from
the Custodian), a notice or undertaking in the form currently employed by such
bank or broker setting forth the amount of collateral. The Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to each such
borrowing: (a) the name of the bank or broker, (b) the amount and terms of the
borrowing, which may be set forth by incorporating by reference an attached
promissory note duly endorsed by the Fund, or a loan agreement, (c) the date,
and time if known, on which the loan is to be entered into, (d) the date on
which the loan becomes due and payable, (e) the total amount payable to the Fund
on the borrowing date, and (f) the description of the Securities securing the
loan, including the name of the issuer, the title and the number of shares or
the principal amount. The Custodian shall deliver on the borrowing date
specified in the Certificate the required collateral against the lender's
delivery of the total loan amount then payable, provided that the same conforms
to that which is described in the Certificate. The Custodian shall deliver, in
the manner directed by the Fund, such Securities as additional collateral, as
may be specified in a Certificate, to secure further any transaction described
in this Article VII. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian and the Custodian
shall receive from time to time such return of collateral as may be tendered to
it.
The Custodian may, at the option of the lender, keep such collateral in
its possession, subject to all rights therein given to the lender because of the
loan. The Custodian may require such reasonable conditions regarding such
collateral and its dealings with third-party lenders as it may deem appropriate.
ARTICLE VIII
CONCERNING THE CUSTODIAN
A. Except as otherwise provided herein, the Custodian shall not be
liable for any loss or damage resulting from its action or omission to act or
otherwise, except for any such loss or damage arising out of its own gross
negligence or willful misconduct. The Fund shall defend, indemnify and hold
harmless the Custodian and its directors, officers, employees and agents with
respect to any loss, claim, liability or cost (including reasonable attorneys'
fees) arising or alleged to arise from or relating to the Fund's duties
hereunder or any other action or inaction of the Fund or its Trustees, officers,
employees or agents, except such as may arise from the negligent action,
7
<PAGE>
omission, willful misconduct or breach of this Agreement by the Custodian. The
Custodian may, with respect to questions of law, apply for and obtain the advice
and opinion of counsel, at the expense of the Fund, and shall be fully protected
with respect to anything done or omitted by it in good faith in conformity with
the advice or opinion of counsel. The provisions under this paragraph shall
survive the termination of this Agreement.
B. Without limiting the generality of the foregoing, the Custodian,
acting in the capacity of Custodian hereunder, shall be under no obligation to
inquire into, and shall not be liable for:
1.) The validity of the issue of any Securities purchased by
or for the account of the Fund, the legality of the
purchase thereof, or the propriety of the amount paid
therefor;
2.) The legality of the sale of any Securities by or for the
account of the Fund, or the propriety of the amount for
which the same are sold;
3.) The legality of the issue or sale of any shares of the
Fund, or the sufficiency of the amount to be received
therefor;
4.) The legality of the redemption of any shares of the Fund,
or the propriety of the amount to be paid therefor;
5.) The legality of the declaration or payment of any dividend
by the Fund in respect of shares of the Fund;
6.) The legality of any borrowing by the Fund on behalf of the
Fund, using Securities as collateral;
C. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to the Fund from any Dividend and
Transfer Agent of the Fund nor to take any action to effect payment or
distribution by any Dividend and Transfer Agent of the Fund of any amount paid
by the Custodian to any Dividend and Transfer Agent of the Fund in accordance
with this Agreement.
D. Notwithstanding Section D of Article V, the Custodian shall not be
under any duty or obligation to take action to effect collection of any amount,
if the Securities upon which such amount is payable are in default, or if
payment is refused after due demand or presentation, unless and until (i) it
shall be directed to take such action by a Certificate and (ii) it shall be
assured to its satisfaction (including prepayment thereof) of reimbursement of
its costs and expenses in connection with any such action.
E. The Fund acknowledges and hereby authorizes the Custodian to hold
Securities through its various agents described in Appendix B annexed hereto.
The Fund hereby represents that such authorization has been duly approved by the
Board of Trustees of the Fund as required by the Act. The Custodian acknowledges
that although certain Fund Assets are held by its agents, the Custodian remains
primarily liable for the safekeeping of the Fund Assets.
In addition, the Fund acknowledges that the Custodian may appoint one
or more financial institutions, as agent or agents or as sub-custodian or
sub-custodians, including, but not limited to, banking institutions located in
foreign countries, for the purpose of holding Securities and moneys at any time
owned by the Fund. The Custodian shall not be relieved of any obligation or
liability under this Agreement in connection with the appointment or activities
of such agents or sub-custodians. Any such agent or sub-custodian shall be
qualified to serve as such for assets of investment companies registered under
the Act. Upon request, the Custodian shall promptly forward
8
<PAGE>
to the Fund any documents it receives from any agent or sub-custodian appointed
hereunder which may assist trustees of registered investment companies fulfill
their responsibilities under Rule 17f-5 of the Act.
F. The Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the account of
the Fund are such as properly may be held by the Fund under the provisions of
the Articles of Incorporation and the Fund's By-Laws.
G. The Custodian shall treat all records and other information relating
to the Fund and the Fund Assets as confidential and shall not disclose any such
records or information to any other person unless (i) the Fund shall have
consented thereto in writing or (ii) such disclosure is required by law.
H. The Custodian shall be entitled to receive and the Fund agrees to
pay to the Custodian such compensation as shall be determined pursuant to
Appendix D attached hereto, or as shall be determined pursuant to amendments to
such Appendix D. The Custodian shall be entitled to charge against any money
held by it for the account of the Fund, the amount of any of its fees, any loss,
damage, liability or expense, including counsel fees. The expenses which the
Custodian may charge against the account of the Fund include, but are not
limited to, the expenses of agents or sub-custodians incurred in settling
transactions involving the purchase and sale of Securities of the Fund.
I. The Custodian shall be entitled to rely upon any Oral Instructions
and any Written Instructions. The Fund agrees to forward to the Custodian
Written Instructions confirming Oral Instructions in such a manner so that such
Written Instructions are received by the Custodian, whether by hand delivery,
facsimile or otherwise, on the same business day on which such Oral Instructions
were given. The Fund agrees that the failure of the Custodian to receive such
confirming instructions shall in no way affect the validity of the transactions
or enforceability of the transactions hereby authorized by the Fund. The Fund
agrees that the Custodian shall incur no liability to the Fund for acting upon
Oral Instructions given to the Custodian hereunder concerning such transactions.
J. The Custodian will (i) set up and maintain proper books of account
and complete records of all transactions in the accounts maintained by the
Custodian hereunder in such manner as will meet the obligations of the Fund
under the Act, with particular attention to Section 31 thereof and Rules 31a-1
and 31a-2 thereunder and those records are the property of the Fund, and (ii)
preserve for the periods prescribed by applicable Federal statute or regulation
all records required to be so preserved. All such books and records shall be the
property of the Fund, and shall be open to inspection and audit at reasonable
times and with prior notice by Officers and auditors employed by the Fund.
K. The Custodian shall send to the Fund any report received on the
systems of internal accounting control of the Custodian, or its agents or
sub-custodians, as the Fund may reasonably request from time to time.
L. The Custodian performs only the services of a custodian and shall
have no responsibility for the management, investment or reinvestment of the
Securities from time to time owned by the Fund. The Custodian is not a selling
agent for shares of the Fund and performance of its duties as custodian shall
not be deemed to be a recommendation to the Fund's depositors or others of
shares of the Fund as an investment.
9
<PAGE>
M. The Custodian shall take all reasonable action, that the Fund may
from time to time request, to assist the Fund in obtaining favorable opinions
from the Fund's independent accountants, with respect to the Custodian's
activities hereunder, in connection with the preparation of the Fund's Form
N-1A, Form N-SAR, or other annual reports to the Securities and Exchange
Commission.
N. The Fund hereby pledges to and grants the Custodian a security
interest in any Fund Assets to secure the payment of any liabilities of the Fund
to the Custodian, whether acting in its capacity as Custodian or otherwise, or
on account of money borrowed from the Custodian. This pledge is in addition to
any other pledge of collateral by the Fund to the Custodian.
ARTICLE X
TERMINATION
A. Either of the parties hereto may terminate this Agreement for any
reason by giving to the other party a notice in writing specifying the date of
such termination, which shall be not less than ninety (90) days after the date
of giving of such notice. If such notice is given by the Fund, it shall be
accompanied by a copy of a resolution of the Board of Trustees of the Fund,
certified by the Secretary of the Fund, electing to terminate this Agreement and
designating a successor custodian or custodians. In the event such notice is
given by the Custodian, the Fund shall, on or before the termination date,
deliver to the Custodian a copy of a resolution of the Board of Trustees of the
Fund, certified by the Secretary, designating a successor custodian or
custodians to act on behalf of the Fund. In the absence of such designation by
the Fund, the Custodian may designate a successor custodian which shall be a
bank or trust company having not less than $100,000,000 aggregate capital,
surplus, and undivided profits. Upon the date set forth in such notice this
Agreement shall terminate, and the Custodian, provided that it has received a
notice of acceptance by the successor custodian, shall deliver, on that date,
directly to the successor custodian all Securities and moneys then owned by the
Fund and held by it as Custodian. Upon termination of this Agreement, the Fund
shall pay to the Custodian on behalf of the Fund such compensation as may be due
as of the date of such termination. The Fund agrees on behalf of the Fund that
the Custodian shall be reimbursed for its reasonable costs in connection with
the termination of this Agreement.
B. If a successor custodian is not designated by the Fund, or by the
Custodian in accordance with the preceding paragraph, or the designated
successor cannot or will not serve, the Fund shall, upon the delivery by the
Custodian to the Fund of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and moneys then owned
by the Fund, be deemed to be the custodian for the Fund, and the Custodian shall
thereby be relieved of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to Securities held in the Book-Entry
System, which cannot be delivered to the Fund, which shall be held by the
Custodian in accordance with this Agreement.
ARTICLE XI
MISCELLANEOUS
A. Appendix A sets forth the names and the signatures of all Authorized
Persons, as certified by the Secretary of the Fund. The Fund agrees to furnish
to the Custodian a new Appendix A in form similar to the attached Appendix A, if
any present Authorized Person ceases to be an
10
<PAGE>
Authorized Person or if any other or additional Authorized Persons are elected
or appointed. Until such new Appendix A shall be received, the Custodian shall
be fully protected in acting under the provisions of this Agreement upon Oral
Instructions or signatures of the then current Authorized Persons as set forth
in the last delivered Appendix A.
B. No recourse under any obligation of this Agreement or for any claim
based thereon shall be had against any organizer, shareholder, Officer,
Director, past, present or future as such, of the Fund or of any predecessor or
successor, either directly or through the Fund or any such predecessor or
successor, whether by virtue of any constitution, statute or rule of law or
equity, or be the enforcement of any assessment or penalty or otherwise; it
being expressly agreed and understood that this Agreement and the obligations
thereunder are enforceable solely against the Fund, and that no such personal
liability whatever shall attach to, or is or shall be incurred by, the
organizers, shareholders, Officers, Trustees of the Fund or of any predecessor
or successor, or any of them as such. To the extent that any such liability
exists, it is hereby expressly waived and released by the Custodian as a
condition of, and as a consideration for, the execution of this Agreement.
C. The obligations set forth in this Agreement as having been made by
the Fund have been made by the Board of Trustees, acting as such Trustees for
and on behalf of the Fund, pursuant to the authority vested in them under the
laws of the State of Delaware, the Declaration of Trust and the By-Laws of the
Fund. This Agreement has been executed by Officers of the Fund as officers, and
not individually, and the obligations contained herein are not binding upon any
of the Trustees, Officers, agents or holders of shares, personally, but bind
only the Fund.
D. Provisions of the Prospectus and any other documents (including
advertising material) specifically mentioning the Custodian (other than merely
by name and address) shall be reviewed with the Custodian by the Fund prior to
publication and/or dissemination or distribution, and shall be subject to the
consent of the Custodian.
E. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at Star
Bank Center, 425 Walnut Street, M. L. 6118, Cincinnati, Ohio 45202, attention
Mutual Fund Custody Department, or at such other place as the Custodian may from
time to time designate in writing.
F. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given when
delivered to the Fund or on the second business day following the time such
notice is deposited in the U.S. mail postage prepaid and addressed to the Fund
at its office at 1462 Waterfront Road, Weston, Virginia 20194 or at such other
place as the Fund may from time to time designate in writing.
G. This Agreement, with the exception of the Appendices, may not be
amended or modified in any manner except by a written agreement executed by both
parties with the same formality as this Agreement, and authorized and approved
by a resolution of the Board of Trustees of the Fund.
H. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund or by the Custodian, and no
attempted assignment by the Fund or the Custodian shall be effective without the
written consent of the other party hereto.
12
<PAGE>
I. This Agreement shall be construed in accordance with the laws of the
State of Ohio.
J. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized as of the day
and year first above written.
ATTEST: AMERICA ASIA ALLOCATION FUND
By:
- -------------------------------- --------------------------------
Title:
-----------------------------
ATTEST: STAR BANK, N.A.
By:
- -------------------------------- --------------------------------
Title:
-----------------------------
12
<PAGE>
APPENDIX A
Authorized Persons Specimen Signatures
Chairman:
------------------------------------- -------------------
President:
------------------ -------------------
Secretary:
------------------ -------------------
Treasurer:
------------------ -------------------
Controller:
------------------ -------------------
Adviser Employees:
------------------ -------------------
Transfer Agent/Fund Accountant
Employees:
------------------ -------------------
13
<PAGE>
APPENDIX B
The following agents are employed currently by Star Bank, N.A. for securities
processing and control . . .
The Depository Trust Company (New York)
7 Hanover Square
New York, NY 10004
The Federal Reserve Bank
Cincinnati and Cleveland Branches
Bankers Trust Company
16 Wall Street
New York, NY 10005
(For Foreign Securities and certain non-DTC eligible Securities)
14
<PAGE>
APPENDIX C
STANDARDS OF SERVICE GUIDE
<PAGE>
APPENDIX D
SCHEDULE OF COMPENSATION
EXHIBIT 99.B.9A
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
SAGE/TSO TRUST
AND
AMERICAN DATA SERVICES, INC.
[GRAPHIC OMITTED]
<PAGE>
INDEX
1. TERMS OF APPOINTMENT; DUTIES OF ADS.......................................3
2. FEES AND EXPENSES.........................................................4
3. REPRESENTATIONS AND WARRANTIES OF ADS.....................................4
4. REPRESENTATIONS AND WARRANTIES OF THE FUND................................5
5. INDEMNIFICATION...........................................................5
6. COVENANTS OF THE FUND AND ADS.............................................7
7. TERMINATION OF AGREEMENT..................................................7
8. ASSIGNMENT................................................................7
9. AMENDMENT.................................................................8
10. NEW YORK LAWS TO APPLY...................................................8
11. MERGER OF AGREEMENT......................................................8
12. NOTICES..................................................................8
2
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made the 1st day of December 1997, by and between Sage/Tso Trust, a
Delaware Business Trust, having its principal office and place of business at
7799 Leesburg Pike, Suite 900 North, Falls Church, VA 22043 (the "Fund"), and
American Data Services, Inc., a New York corporation having its principal office
and place of business at the Hauppauge Corporate Center, 150 Motor Parkway,
Suite 109, Hauppauge, New York 11788 ("ADS").
WHEREAS, the Fund desires to appoint ADS as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities,
and ADS desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. TERMS OF APPOINTMENT; DUTIES OF ADS
1.01 Subject to the terms and conditions set forth in this agreement,
the Fund hereby employs and appoints ADS to act as, and ADS agrees to act as its
transfer agent for the Fund's authorized and issued shares of its common stock
("Shares"), dividend disbursing agent and agent in connection with any
accumulation, open-account or similar plans provided to the shareholders of the
fund ("Shareholders") set out in the currently effective prospectus and
statement of additional information ("prospectus") of the Fund.
1.02 ADS agrees that it will perform the following services:
(a) In accordance with procedures established from time to
time by agreement between the Fund and ADS, ADS shall:
Receive for acceptance, orders for the purchase of Shares, and promptly deliver
payment and appropriate documentation therefore to the Custodian of the
Fund authorized by the Board of Directors of the Fund (the "Custodian");
Pursuant to purchase orders, issue the appropriate number of Shares and hold
such Shares in the appropriate Shareholder account;
Receive for acceptance redemption requests and redemption directions and deliver
the appropriate documentation therefore to the Custodian;
At the appropriate time as and when it receives monies paid to it by the
Custodian with respect to any redemption, pay over or cause to be paid over
in the appropriate manner such monies as instructed by the redeeming
Shareholders;
Effect transfers of Shares by the registered owners thereof upon receipt of
appropriate instructions;
Prepare and transmit payments for dividends and distributions declared by the
Fund;
Maintain records of account for and advise the Fund and its Shareholders as to
the foregoing; and
Record the issuance of shares of the Fund and maintain pursuant to SEC Rule
17Ad-10(e) a record of the total number of shares of the Fund which are
authorized, based upon data provided to it by the Fund,
3
<PAGE>
and issued and outstanding. ADS shall also provide the Fund on a regular
basis with the total number of shares which are authorized and issued and
outstanding and shall have no obligation, when recording the issuance of
shares, to monitor the issuance of such shares or to take cognizance of any
laws relating to the issue or sale of such shares, which functions shall be
the sole responsibility of the Fund.
(b) In addition to and not in lieu of the services set forth in the
above paragraph (a), ADS shall:
Perform all of the customary services of a transfer agent, dividend disbursing
agent, including but not limited to: maintaining all Shareholder accounts,
preparing Shareholder meeting lists, mailing proxies, receiving and
tabulating proxies, mailing Shareholder reports and prospectuses to current
Shareholders, withholding taxes on U.S. resident and non-resident alien
accounts, preparing and filing U.S. Treasury Department Forms 1099 and
other appropriate forms required with respect to dividends and
distributions by federal authorities for all Shareholders, preparing and
mailing confirmation forms and statements of account to Shareholders for
all purchases redemption's of Shares and other confirmable transactions in
Shareholder accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account information and (ii)
provide a system and reports which will enable the Fund to monitor the
total number of Shares sold in each State.
In addition, the Fund shall (i) identify to ADS in writing those
transactions and shares to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of such
transactions for each state on the system prior to activation and
thereafter monitor the daily activity for each State as provided by
ADS. The responsibility of ADS for the Fund's blue sky State
registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and the
reporting of such transactions to the Fund as provided above.
Procedures applicable to certain of these services may be established
from time to time by agreement between the Fund and ADS.
2. FEES AND EXPENSES
2.01 For performance by ADS pursuant to this Agreement, the Fund agrees
to pay ADS an annual maintenance fee for each Shareholder account and
transaction fees for each portfolio or class of shares serviced under this
Agreement (See Schedule A) as set out in the fee schedule attached hereto. Such
fees and out-of pocket expenses and advances identified under Section 2.02 below
may be changed from time to time subject to mutual written agreement between the
Fund and ADS.
2.02 In addition to the fee paid under Section 2.01 above, the Fund
agrees to reimburse ADS for out-of-pocket expenses or advances incurred by ADS
for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by ADS at the request or with the consent of the Fund,
will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses within
five days following the receipt of the respective billing notice. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
shareholder accounts shall be advanced to ADS by the Fund at least seven (7)
days prior to the mailing date of such materials.
3. REPRESENTATIONS AND WARRANTIES OF ADS
ADS represents and warrants to the Fund that:
4
<PAGE>
3.01 It is a corporation duly organized and existing and in good
standing under the laws of The State of New York.
3.02 It is duly qualified to carry on its business in The State of New
York.
3.03 It is empowered under applicable laws and by its charter and
by-laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
3.06 ADS is duly registered as a transfer agent under the Securities
Act of 1934 and shall continue to be registered throughout the remainder of this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to ADS that;
4.01 It is a Business Trust duly organized and existing and in good
standing under the laws of Delaware.
4.02 It is empowered under applicable laws and by its Declaration of
Trust to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Declaration of Trust
have been taken to authorize it to enter into and perform this Agreement.
4.04 It is an open-end and diversified management investment company
registered under the Investment Company Act of 1940.
4.05 A registration statement under the Securities Act of 1933 is
currently or will become effective and will remain effective, and appropriate
state securities law filings as required, have been or will be made and will
continue to be made, with respect to all Shares of the Fund being offered for
sale.
5. INDEMNIFICATION
5.01 ADS shall not be responsible for, and the Fund shall indemnify and
hold ADS harmless from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or attributable
to:
(a)All actions of ADS or its agents or subcontractors required to be taken
pursuant to this Agreement, provided that such actions are taken in good
faith and without gross negligence or willful misconduct.
(b)The Fund's refusal or failure to comply with the terms of this Agreement, or
which arise out of the Fund's lack good faith, gross negligence or willful
misconduct or which arise out of the breach of any representation or
warranty of the Fund hereunder.
5
<PAGE>
(c)The reliance on or use by ADS or its agents or subcontractors of information,
records and documents which (i) are received by ADS or its agents or
subcontractors and furnished to it by or on behalf of the Fund, and (ii)
have been prepared and/or maintained by the Fund or any other person or
firm on behalf of the Fund.
(d)The reliance on, or the carrying out by ADS or its agents or subcontractors
of any instructions or requests of the Fund.
(e)The offer or sale of Shares in violation of any requirement under the federal
securities laws or regulations or the securities laws or regulations of any
state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any
state with respect to the offer or sale of such Shares in such state.
5.02 ADS shall indemnify and hold the Fund harmless from and against any
and all losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to any action or failure or omission to
act by ADS as a result of ADS's lack of good faith, gross negligence or willful
misconduct.
5.03 At any time ADS may apply to any officer of the Fund for instructions,
and may consult with legal counsel with respect to any matter arising in
connection with the services to be performed by ADS under this Agreement, and
ADS and its agents or subcontractors shall not be liable and shall be
indemnified by the Fund for any action taken or omitted by it in reliance upon
such instructions or upon the opinion of such counsel. ADS, its agents and
subcontractors shall be protected and indemnified in acting upon any paper or
document furnished by or on behalf of the Fund, reasonably believed to be ge
nuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided ADS or its agents
or subcontractors by machine readable input, telex, CRT data entry or other
similar means authorized by the Fund, and shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Fund. ADS, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Fund, and
the proper countersignature of any former transfer agent or registrar, or of a
co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any act or
failure to act hereunder.
5.06 In order that the indemnification provisions contained in this Article
5 shall apply, upon the assertion of a claim for which either party may be
required to indemnify the other, the party of seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
6
<PAGE>
6. COVENANTS OF THE FUND AND ADS
6.01 The Fund Shall promptly furnish to ADS a certified copy of the
resolution of the Board of Trustees of the Fund authorizing the appointment of
ADS and the execution and delivery of this Agreement.
6.02 ADS hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Fund for safekeeping of stock certificates, check
forms and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such certificates, forms and
devices.
6.03 ADS shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, ADS agrees that all such records prepared or maintained by
ADS relating to the services to be performed by ADS hereunder are the property
of the Fund and will be preserved, maintained and made available in accordance
with such Section and Rules, and will be surrendered promptly to the Fund on and
in accordance with its request.
6.04 ADS and the Fund agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other person, except
as may be required by law.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, ADS will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. ADS reserves the right, however, to exhibit the Shareholder records
to any person whenever it is advised by its counsel that it may be held liable
for the failure to exhibit the Shareholder records to such person, and shall
promptly notify the Fund of any unusual request to inspect or copy the
shareholder records of the Fund or the receipt of any other unusual request to
inspect, copy or produce the records of the Fund.
7. TERMINATION OF AGREEMENT
7.01 This Agreement shall become effective as of the date hereof and shall
remain in force until terminated. Either party to this Agreement has the option
to terminate the Agreement, upon thirty (30) days prior written notice.
7.02 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, ADS reserves the right to charge for any other mutually
agreed upon expenses associated with such termination.
8. ASSIGNMENT
8.01 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the written consent of the other party.
8.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
7
<PAGE>
9. AMENDMENT
9.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Directors of the Fund.
10. NEW YORK LAWS TO APPLY
10.01 The provisions of this Agreement shall be construed and interpreted
in accordance with the laws of the State of New York as at the time in effect
and the applicable provisions of the 1940 Act. To the extent that the applicable
law of the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
11. MERGER OF AGREEMENT
11.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
12. NOTICES.
All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when received or when sent by telex or
facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
To the Fund: To ADS:
Mr. James C. Tso Michael Miola
President President
Sage/Tso Trust American Data Services, Inc.
7799 Leesburg Pike, Suite 900 North 150 Motor Parkway, Suite 109
Falls Church, VA 22043 Hauppauge, NY 11788
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
SAGE/TSO TRUST AMERICAN DATA SERVICES, INC.
.
By: /s/ James C. Tso By: /s/ Michael Miola
--------------------------- ---------------------------
James C. Tso, President Michael Miola, President
8
EXHIBIT 99.B.6
UNDERWRITING AGREEMENT
between
SAGE/TSO TRUST
AND
ADS DISTRIBUTORS, INC.
[GRAPHIC OMITTED]
<PAGE>
[GRAPHIC OMITTED]
UNDERWRITING AGREEMENT
----------------------
AGREEMENT made as of this 1st day of December 1997 between Sage/Tso Trust, a
Delaware Business Trust (the "Fund"), and ADS Distributors, Inc., a Florida
Corporation (the "Underwriter").
The Underwriter will receive orders from purchasers for and the Fund will sell,
issue and deliver from time to time to such purchasers, such part of the
authorized shares of capital stock of the Fund remaining un-issued as from
time to time shall be effectively registered under the Securities Act of
1933, as amended (the "33 Act"), at prices determined as hereinafter
provided and on the terms hereinafter set forth, all subject to applicable
Federal and State laws and regulations and to the charter of the Fund.
The Underwriter shall present all orders received by it for shares of capital
stock of the Fund to the Fund by telegraphic or written purchase orders and
each such order shall be subject to the acceptance or rejection by the Fund
in its sole discretion
2.1 Notwithstanding any other provision hereof, whenever in the judgment of
the Fund such action is warranted by market, economic or political
conditions or by abnormal circumstances of any kind, the Fund may suspend
the offer of shares in effect and may, without liability under the provision
of this Agreement, decline to accept or confirm any orders or make any sales
of shares or capital stock under this Agreement until such time as the Fund
shall deem it advisable to resume the offering of such shares, provided that
as soon as practicable after the taking of any such action a special meeting
of the Board of Directors shall be called to be held as soon as practicable
thereafter to determine whether or not such action shall then continue to be
effective, and the period during, or the circumstance under, which such
action shall continue or cease to be effective. During any period during
which the offer of shares shall be suspended or the Fund shall decline to
acceptor confirm any such orders or make any such sales, the Fund shall be
under no obligation to confirm or accept any such orders or make any such
sale at any price.
2.2 The Fund will use its best efforts to keep effectively registered under
the 33 Act for sale as herein contemplated such shares of its capital stock
as the Underwriter shall reasonably request and as the Securities and
Exchange Commission (the "SEC") shall permit to be so registered.
<PAGE>
Sales by the Underwriter shall be made as agent for the Fund and all such sales
be made to or though qualified dealers or others in such manner, not
inconsistent with the provisions hereof and the then effective
registration statement of the Fund under the 33 Act, (and related
prospectus), as the Underwriter may determine from time to time.
All shares of capital stock offered for sale or sold by the Underwriter shall
be so offered or sold at a price per share (the "Offering Price") equal to
the net asset value per share (determined as authorized from time to time
by the Board of Directors of the Fund pursuant to its charter).
4.1 For the purpose of determining the offering price, the net asset value
of any such shares shall be so determined in accordance with the then
current offering prospectus. The Fund, or its authorized agent, will
promptly furnish to the Underwriter a statement of the Offering Price as
often as such net asset value is determined and such statement shall at
the request of the Underwriter show the basis of computation of the
Offering Price.
4.2 Orders presented by the Underwriter for shares, if accepted by the
Fund, shall be accepted and confirmed by it or its duly authorized agent
at the Offering Price in effect at the time of its receipt of such order
at its principal office.
4.3 The Underwriter will not in any event (a) offer for sale or sell
shares of capital stock in excess of the number then effectively
registered under the 33 Act, and available for sale, or (b) offer for sale
or sell any shares in violation of any applicable Federal or State law,
rule or regulation.
The Fund will execute any and all documents and furnish any and all
information which may be reasonably necessary in connection with the
qualification of its shares of capital stock in such states as the
Underwriter may reasonably request (it being understood that the Fund
shall not be required without its consent to qualify to do business in any
jurisdiction or to comply with any requirement which in its opinion is
unduly burdensome). The Underwriter, at its own expense, will effect all
qualifications as dealer or broker.
The Fund will furnish to the Underwriter from time to time such information
with respect to its shares as the Underwriter may reasonably request for
use in connection with the sale of shares. The Underwriter will not use or
distribute or authorize the use, distribution or dissemination by its
dealers or others in connection with such sale of any literature,
advertising or selling aids in any form or through any medium, written or
oral, without prior written specific approval thereof by the Fund.
Nothing herein contained shall limit the right of the Fund, in its absolute
discretion, to issue or sell shares of its capital stock for such other
considerations (whether in
<PAGE>
connection with the acquisition of assets or shares or securities of
another corporation or entity or with the merger or consolidation of any
other corporation into or with the Fund, or otherwise) as and to the
extent permitted by its charter and any applicable laws, or to issue or
sell any such shares directly to the shareholders of the Fund, upon such
terms and conditions and for such consideration, if any, as may be
determined by the Board of Directors, whether pursuant to the distribution
of subscription or purchase rights to such holders or by way of dividends
or otherwise.
At the request of the Fund, the Underwriter agrees to act as agent for the
Fund for the repurchase or redemption of shares of the Fund at such prices
as the Fund from time to time shall prescribe.
In selling or reacquiring shares, the Underwriter agrees to conform to the
requirements of all state and Federal laws relating to such sale or
reacquisition, as the case may be, and will indemnify and hold the Fund
harmless from any damage or expense on account of any wrongful act by the
Underwriter or any employee, representative or agent of the Underwriter.
The Underwriter will observe and be bound by all the provisions of the
charter of the Fund and any fundamental policies adopted by the Fund
pursuant to the Investment Company Act of 1940, as amended (the "40 Act"),
notice of which has been given to the Underwriter.
Neither the Underwriter, any dealer nor any other person is authorized by the
Fund to give any information or to make any representation other than
those contained (a) in the latest effective registration statement (and
related prospectus) filed with the SEC under the 33 Act as such
registration statement (and prospectus) may be amended from time to time,
or (b) in any statement expressly authorized by the Fund for use in
connection with any sale or reacquisition of capital stock for the account
of the Fund.
This Agreement shall continue in effect until such time as there remain no
unsold balance of shares of capital stock effectively registered under the
33 Act; provided, however, that (a) this Agreement shall continue in
effect for a period more than two years from the date hereof only so long
as such continuance is specifically approved at least annually by the
Board of Directors or a majority of the outstanding voting securities of
the Fund, and (b) either party hereto may terminate this Agreement on any
date by giving the other party at least six months prior written notice of
such termination specifying the date fixed therefor..
11.1 This Agreement shall automatically terminate in the event of its
assignment by the Underwriter, the term "assignment" having the meaning
defined in Section 2(a)(4) of the 40 Act.
<PAGE>
Any notice under this Agreement shall be in writing addressed and delivered
by mail, postage prepaid, to the party to whom addressed at the address
given below, or at such other address as such party shall theretofore have
designated (by notice given to the other party as herein provided) in
writing for the receipt of such notice:
TO THE FUND: TO THE UNDERWRITER:
Mr. James C. Tso Mr. Michael Rogan
President President
Sage/Tso Trust ADS Distributors, Inc.
7799 Leesburg Pike, Suite 900 North 101 Main Street, Suite E
Falls Church, VA 22043 Safety Harbor, Florida 34695
IN WITNESS WHEREOF, The Fund and the Underwriter have each
caused this Agreement to be executed on its behalf by an officer thereunto duly
authorized on the day and year first above written.
SAGE/TSO TRUST ADS DISTRIBUTORS, INC.
By: /s/ James C. Tso, President By: /s/ Michael Rogan, President
---------------------------- ----------------------------
James C. Tso, President Michael Rogan, President
EXHIBIT 99.B.9B
ADMINISTRATIVE SERVICE AGREEMENT
BETWEEN
SAGE/TSO TRUST
AND
AMERICAN DATA SERVICES, INC.
[GRAPHIC OMITTED]
<PAGE>
INDEX
1. DUTIES OF THE ADMINISTRATOR................................................3
2. COMPENSATION OF THE ADMINISTRATOR..........................................4
3. RESPONSIBILITY AND INDEMNIFICATION.........................................4
4. REPORTS....................................................................5
5. ACTIVITIES OF THE ADMINISTRATOR............................................5
6. RECORDS....................................................................5
7. CONFIDENTIALITY............................................................6
8. DURATION AND TERMINATION OF THE AGREEMENT..................................6
9. ASSIGNMENT.................................................................6
10. NEW YORK LAWS TO APPLY....................................................6
11. AMENDMENTS TO THIS AGREEMENT...............................................6
12. MERGER OF AGREEMENT........................................................6
13. NOTICES....................................................................6
2
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
---------------------------------
AGREEMENT made the 1st day of December 1997, by and between Sage/Tso Trust, a
Delaware Business Trust, having its principal office and place of business at
7799 Leesburg Pike, Suite 900 North, Falls Church, VA 22043 (the "Fund"), and
American Data Services, Inc., a New York corporation having its principal office
and place of business at the Hauppauge Corporate Center, 150 Motor Parkway,
Suite 109, Hauppauge, New York 11788 (the "Administrator").
BACKGROUND
WHEREAS, the Fund is a diversified open-end management investment
company registered with the United States Securities and Exchange Commission
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Administrator is a corporation experienced in providing
administrative services to mutual funds and possesses facilities sufficient to
provide such services; and
WHEREAS, the Fund desires to avail itself of the experience,
assistance and facilities of the Administrator and to have the Administrator
perform for the Fund certain services appropriate to the operations of the Fund
and the Administrator is willing to furnish such services in accordance with the
terms hereinafter set forth.
TERMS
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, the Fund and the Administrator hereby agree to the
following:
1. DUTIES OF THE ADMINISTRATOR.
The Administrator will provide the Fund with the necessary office
space, communication facilities and personnel to perform the following services
for the Fund:
(a) Monitor all regulatory (1940 Act and IRS) and prospectus
restrictions for compliance;
(b) Prepare and coordinate the printing of semi-annual and
annual financial statements;
(c) Prepare selected management reports for performance and
compliance analyses as agreed upon by the Fund and
Administrator from time to time;
(d) Prepare selected financial data required for directors'
meetings as agreed upon by the Fund and the Administrator
from time to time and coordinate directors meeting agendas
with outside legal counsel to the Fund;
(e) Determine income and capital gains available for
distribution and calculate distributions required to meet
regulatory, income, and excise tax requirements, to be
reviewed by the Fund's independent public accountants;
(f) Prepare the Fund's federal, state, and local tax returns
to be reviewed by the Fund's independent public
accountants;
(g) Prepare and maintain the Fund's operating expense budget
to determine proper expense
3
<PAGE>
accruals to be charged to the Fund in order to calculate
it's daily net asset value;
(h) 1940 ACT filings -
In conjunction with the Fund's outside legal counsel the
Administrator will: Prepare the Fund's Form N-SAR reports;
Update all financial sections of the Fund's Statement of Additional Information
and coordinate its completion with legal counsel to the Fund;
Update all financial sections of the Fund's prospectus and coordinate its
completion with legal counsel to the Fund;
Update all financial sections of the Fund's proxy statement and coordinate its
completion with legal counsel to the Fund;
Prepare an annual update to Fund's 24f-2 filing (if applicable);
(i) Monitor services provided by the Fund's custodian bank as well as
any other service providers to the Fund;
(j) Provide appropriate financial schedules (as requested by the
Fund's independent public accountants or SEC examiners),
coordinate the Fund's annual or SEC audit, and provide office
facilities as may be required;
(k) Attend management and board of directors meetings as requested;
(l) The preparation and filing (filing fee to be paid by the Fund) of
applications and reports as necessary to register or maintain the
Funds registration under the securities or "Blue Sky" laws of the
various states selected by the Fund or its Distributor.
The Administrator shall, for all purposes herein, be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Fund in any way or otherwise be deemed an
agent of the Fund.
2. COMPENSATION OF THE ADMINISTRATOR.
In consideration of the services to be performed by ADS as set forth
herein for each portfolio listed in Schedule B, ADS shall be entitled to receive
compensation and reimbursement for all reasonable out-of-pocket expenses. The
Fund agrees to pay ADS the fees and reimbursement of out-of-pocket expenses as
set forth in the fee schedule attached hereto as Schedule A.
3. RESPONSIBILITY AND INDEMNIFICATION.
(a) The Administrator shall be held to the exercise of reasonable care
in carrying out the provisions of the Agreement, but shall be without liability
to the Fund for any action taken or omitted by it in good faith without gross
negligence, bad faith, willful misconduct or reckless disregard of its duties
hereunder. It shall be entitled to rely upon and may act upon the accounting
records and reports generated by the Fund, advice of the Fund, or of counsel for
the Fund and upon statements of the Fund's independent accountants, and shall be
without liability for any action reasonably taken or omitted pursuant to such
records and reports or advice, provided that such action is not, to the
knowledge of the Administrator, in violation of applicable federal or state laws
or regulations, and provided further that such action is taken without gross
negligence, bad faith, willful misconduct or reckless disregard of its duties.
(b) The Administrator shall not be liable to the Fund for any error of
judgment or mistake of law or for any loss arising out of any act or omission by
the Administrator in the performance of its duties
4
<PAGE>
hereunder except as hereinafter set forth. Nothing herein contained shall be
construed to protect the Administrator against any liability to the Fund or its
security holders to which the Administrator shall otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence in the performance of its
duties on behalf of the Fund, reckless disregard of the Administrator's
obligations and duties under this Agreement or the willful violation of any
applicable law.
(c) Except as may otherwise be provided by applicable law, neither the
Administrator nor its stockholders, officers, directors, employees or agents
shall be subject to, and the Fund shall indemnify and hold such persons harmless
from and against, any liability for and any damages, expenses or losses incurred
by reason of the inaccuracy of information furnished to the Administrator by the
Fund or its authorized agents or in connection with any error in judgment or
mistake of law or any act or omission in the course of, connected with or
arising out of any services to be rendered hereunder, except by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties, by reason of reckless disregard of the Administrator's obligations and
duties under this Agreement or the willful violation of any applicable law.
4. REPORTS.
(a) The Fund shall provide to the Administrator on a quarterly basis a
report of a duly authorized officer of the Fund representing that all
information furnished to the Administrator during the preceding quarter was
true, complete and correct to the best of its knowledge. The Administrator shall
not be responsible for the accuracy of any information furnished to it by the
Fund, and the Fund shall hold the Administrator harmless in regard to any
liability incurred by reason of the inaccuracy of such information.
(b) The Administrator shall provide to the Board of Directors of the
Fund, on a quarterly basis, a report, in such a form as the Administrator and
the Fund shall from time to time agree, representing that, to its knowledge, the
Fund was in compliance with all requirements of applicable federal and state
law, including without limitation, the rules and regulations of the Securities
and Exchange Commission and the Internal Revenue Service, or specifying any
instances in which the Fund was not so in compliance. Whenever, in the course of
performing its duties under this Agreement, the Administrator determines, on the
basis of information supplied to the Administrator by the Fund, that a violation
of applicable law has occurred, or that, to its knowledge, a possible violation
of applicable law may have occurred or, with the passage of time, could occur,
the Administrator shall promptly notify the Fund and its counsel of such
violation.
5. ACTIVITIES OF THE ADMINISTRATOR.
The Administrator shall be free to render similar services to others so
long as its services hereinunder are not impaired thereby.
6. RECORDS.
The records maintained by the Administrator shall be the property of
the Fund, and shall be made available to the Fund promptly upon request by the
Fund in the form in which such records have been maintained or preserved. The
Administrator shall upon approval of the Fund assist the Fund's independent
auditors, or, any regulatory body, in any requested review of the Fund's
accounts and records. The Administrator shall preserve the records in its
possession (at the expense of the Fund) as required by Rule 31a-1 of the 1940
Act.
5
<PAGE>
7. CONFIDENTIALITY.
The Administrator agrees that it will, on behalf of itself and its
officers and employees, treat all transactions contemplated by this Agreement,
and all other information germane thereto, as confidential and such information
shall not be disclosed to any person except as may be authorized by the Fund.
8. DURATION AND TERMINATION OF THE AGREEMENT.
This Agreement shall become effective as of the date hereof and shall
remain in force until terminated. Either party to this Agreement has the option
to terminate the Agreement, upon thirty (30) days prior written notice.
Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, the Administrator reserves the right to charge for any
other mutually agreed upon expenses associated with such termination.
9. ASSIGNMENT.
This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the prior written consent
of the Administrator, or by the Administrator without the prior written consent
of the Fund.
10. NEW YORK LAWS TO APPLY
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the 1940 Act. To the extent that the applicable law
of the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
11. AMENDMENTS TO THIS AGREEMENT.
This Agreement may be amended by the parties hereto only if such
amendment is in writing and signed by both parties.
12. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
13. NOTICES.
All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when delivered in person or by certified
mail, return receipt requested, and shall be given to the following addresses
(or such other addresses as to which notice is given):
To the Fund: To the Administrator:
Mr. James C. Tso Michael Miola
President President
Sage/Tso Trust American Data Services, Inc.
7799 Leesburg Pike, Suite 900 North 150 Motor Parkway, Suite 109
Falls Church, VA 22043 Hauppauge, NY 11788
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
SAGE/TSO TRUST AMERICAN DATA SERVICES, INC.
.
By: /s/ James C. Tso By: /s/ Michael Miola
---------------------------- ------------------------------
James C. Tso, President Michael Miola, President
7
EXHIBIT 99.B.9c
FUND ACCOUNTING SERVICE AGREEMENT
BETWEEN
SAGE/TSO TRUST
AND
AMERICAN DATA SERVICES, INC.
[GRAPHIC OMITTED]
<PAGE>
INDEX
1. DUTIES OF ADS...............................................................3
2. COMPENSATION OF ADS.........................................................4
3. LIMITATION OF LIABILITY OF ADS..............................................4
4. REPORTS.....................................................................5
5. ACTIVITIES OF ADS...........................................................5
6. ACCOUNTS AND RECORDS........................................................5
7. CONFIDENTIALITY.............................................................5
8. DURATION AND TERMINATION OF THIS AGREEMENT..................................5
9. ASSIGNMENT..................................................................6
10. NEW YORK LAWS TO APPLY....................................................6
11. AMENDMENTS TO THIS AGREEMENT...............................................6
12. MERGER OF AGREEMENT........................................................6
13. NOTICES....................................................................6
<PAGE>
FUND ACCOUNTING SERVICE AGREEMENT
AGREEMENT made the 1st day of December 1997, by and between Sage/Tso Trust, a
Delaware Business Trust, having its principal office and place of business at
7799 Leesburg Pike, Suite 900 North, Falls Church, VA 22043 (the "Fund"), and
American Data Services, Inc., a New York corporation having its principal office
and place of business at the Hauppauge Corporate Center, 150 Motor Parkway,
Suite 109, Hauppauge, New York 11788 ("ADS").
BACKGROUND
WHEREAS, the Fund is a diversified, open-end management investment company
registered with the United States Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, ADS is a corporation experienced in providing accounting services to
mutual funds and possesses facilities sufficient to provide such services; and
WHEREAS, the Fund desires to avail itself of the experience, assistance and
facilities of ADS and to have ADS perform for the Fund certain services
appropriate to the operations of the Fund, and ADS is willing to furnish such
services in accordance with the terms hereinafter set forth.
TERMS
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, the Fund and ADS hereby agree as follows:
1. DUTIES OF ADS.
ADS will provide the Fund with the necessary office space, communication
facilities and personnel to perform the following services for the Fund:
(a) Timely calculate and transmit to NASDAQ the Fund's daily net
asset value and communicate such value to the Fund and its
transfer agent;
Maintain and keep current all books and records of the Fund as
required by Rule 31a-1 under the 1940 Act, as such rule or any
successor rule may be amended from time to time ("Rule 31a-1"),
that are applicable to the fulfillment of ADS's duties hereunder,
as well as any other documents necessary or advisable for
compliance with applicable regulations as may be mutually agreed
to between the Fund and ADS. Without limiting the generality of
the foregoing, ADS will prepare and maintain the following
records upon receipt of information in proper form from the Fund
or its authorized agents:
Cash receipts journal
Cash disbursements journal
Dividend record
Purchase and sales - portfolio securities journals
Subscription and redemption journals
Security ledgers
Broker ledger
General ledger
Daily expense accruals
Daily income accruals
<PAGE>
Securities and monies borrowed or loaned and
collateral therefore
Foreign currency journals
Trial balances
(c) Provide the Fund and its investment adviser with daily
portfolio valuation, net asset value calculation and other
standard operational reports as requested from time to time.
(d) Provide all raw data available from our fund accounting
system (PAIRS) for management's or the administrators
preparation of the following:
1. Semi-annual financial statements;
2. Semi-annual form N-SAR;
3. Annual tax returns;
4. Financial data necessary to update form N-1a;
5. Annual proxy statement.
(e) Provide facilities to accommodate annual audit and any
audits or examinations conducted by the Securities and
Exchange Commission or any other governmental or quasi-
governmental entities with jurisdiction.
ADS shall for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent the Fund in any way or otherwise be deemed an agent of the
Fund.
2. COMPENSATION OF ADS.
In consideration of the services to be performed by ADS as set forth
herein for each portfolio listed in Schedule B, ADS shall be entitled to receive
compensation and reimbursement for all reasonable out-of-pocket expenses. The
Fund agrees to pay ADS the fees and reimbursement of out-of-pocket expenses as
set forth in the fee schedule attached hereto as Schedule A.
3. LIMITATION OF LIABILITY OF ADS.
(a) ADS shall be held to the exercise of reasonable care in carrying
out the provisions of the Agreement, but shall be without liability to the Fund
for any action taken or omitted by it in good faith without gross negligence,
bad faith, willful misconduct or reckless disregard of its duties hereunder. It
shall be entitled to rely upon and may act upon the accounting records and
reports generated by the Fund, advice of the Fund, or of counsel for the Fund
and upon statements of the Fund's independent accountants, and shall be without
liability for any action reasonably taken or omitted pursuant to such records
and reports or advice, provided that such action is not, to the knowledge of
ADS, in violation of applicable federal or state laws or regulations, and
provided further that such action is taken without gross negligence, bad faith,
willful misconduct or reckless disregard of its duties.
(b) Nothing herein contained shall be construed to protect ADS against
any liability to the Fund or its security holders to which ADS shall otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence in the
performance of its duties on behalf of the Fund, reckless disregard of ADS'
obligations and duties under this Agreement or the willful violation of any
applicable law.
(c) Except as may otherwise be provided by applicable law, neither ADS
nor its stockholders, officers, directors, employees or agents shall be subject
to, and the Fund shall indemnify and hold such persons harmless from and
against, any liability for and any damages, expenses or losses incurred by
reason of the inaccuracy of information furnished to ADS by the Fund or its
authorized agents.
<PAGE>
4. REPORTS.
(a) The Fund shall provide to ADS on a quarterly basis a report of a
duly authorized officer of the Fund representing that all information furnished
to ADS during the preceding quarter was true, complete and correct in all
material respects. ADS shall not be responsible for the accuracy of any
information furnished to it by the Fund or its authorized agents, and the Fund
shall hold ADS harmless in regard to any liability incurred by reason of the
inaccuracy of such information.
(b) Whenever, in the course of performing its duties under this
Agreement, ADS determines, on the basis of information supplied to ADS by the
Fund or its authorized agents, that a violation of applicable law has occurred
or that, to its knowledge, a possible violation of applicable law may have
occurred or, with the passage of time, would occur, ADS shall promptly notify
the Fund and its counsel of such violation.
5. ACTIVITIES OF ADS.
The services of ADS under this Agreement are not to be deemed
exclusive, and ADS shall be free to render similar services to others so long as
its services hereunder are not impaired thereby.
6. ACCOUNTS AND RECORDS.
The accounts and records maintained by ADS shall be the property of
the Fund, and shall be surrendered to the Fund promptly upon request by the Fund
in the form in which such accounts and records have been maintained or
preserved. ADS agrees to maintain a back-up set of accounts and records of the
Fund (which back-up set shall be updated on at least a weekly basis) at a
location other than that where the original accounts and records are stored. ADS
shall assist the Fund's independent auditors, or, upon approval of the Fund, any
regulatory body, in any requested review of the Fund's accounts and records. ADS
shall preserve the accounts and records as they are required to be maintained
and preserved by Rule 31a-1.
7. CONFIDENTIALITY.
ADS agrees that it will, on behalf of itself and its officers and
employees, treat all transactions contemplated by this Agreement, and all other
information germane thereto, as confidential and not to be disclosed to any
person except as may be authorized by the Fund.
8. DURATION AND TERMINATION OF THIS AGREEMENT.
This Agreement shall become effective as of the date hereof and shall
remain in force until terminated. Either party to this Agreement has the option
to terminate the Agreement, upon thirty (30) days prior written notice.
Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, ADS reserves the right to charge for any other mutually
agreed upon expenses associated with such termination.
9. ASSIGNMENT.
This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the prior written consent
of ADS, or by ADS without the prior written consent of the Fund.
<PAGE>
10. NEW YORK LAWS TO APPLY
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the 1940 Act. To the extent that the applicable law
of the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
11. AMENDMENTS TO THIS AGREEMENT.
This Agreement may be amended by the parties hereto only if such
amendment is in writing and signed by both parties.
12. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
13. NOTICES.
All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when received or when sent by telex or
facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
To the Fund: To the Administrator:
Mr. James C. Tso Michael Miola
President President
Sage/Tso Trust American Data Services, Inc.
7799 Leesburg Pike, Suite 900 North 150 Motor Parkway, Suite 109
Falls Church, VA 22043 Hauppauge, NY 11788
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
SAGE/TSO TRUST AMERICAN DATA SERVICES, INC.
.
By:/s/ James C. Tso By: /s/ Michael Miola
--------------------- ---------------------
James C. Tso, President Michael Miola, President
EXHIBIT 99.B.11A
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 2 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated October 21, 1997, relating to the financial
statements and financial highlights America Asia Allocation Growth Fund
(constituting Sage/Tso Trust, hereafter referred to as the "Trust"), appearing
in the September 30, 1997 Annual Report to Shareholders of the Trust, which is
also incorporated by reference into the Registration Statement. We also consent
to the references to us under the heading "Financial Highlights" in the
Prospectus and under the headings "Independent Accountants" and "Financial
Statements" in the Statement of Additional Information.
PRICE WATERHOUSE LLP
Philadelphia, PA
October 21, 1997
EXHIBIT 99.B.15(B)
ADDENDUM TO
DISTRIBUTION PLAN PURSUANT TO RULE 12B-1
FOR
AMERICA ASIA ALLOCATION GROWTH FUND - CLASS A
WHEREAS, the Sage/Tso Trust (the "Trust") has adopted a Distribution Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "Plan") on
behalf of the Class A shares of America Asia Allocation Growth Fund (the
"Fund"); and
WHEREAS, ADS Distributors, Inc. ("ADS Distributors") has been appointed
Distributor for Sage/Tso Trust (the "Trust") effective January 1, 1998 pursuant
to an Underwriting Agreement dated as of January 1, 1998;
NOW, THEREFORE, the parties hereto, intending to be legally bound, do hereby
agree:
1. This Addendum is adopted pursuant to, and will be made a part of,
the Plan.
2. ADS Distributors agrees to serve as sole Distributor under the
Plan effective January 1, 1998.
3. ADS Distributors agrees to comply with the terms and conditions
of the Plan.
ACCEPTED AND AGREED TO
this 1 day of January, 1998.
SAGE\TSO TRUST
By: /s/ James C. Tso
-------------------
James C. Tso, President
ADS DISTRIBUTORS, INC.
By: /s/ Michael Miola
-------------------
Michael Miola, President
EXHIBIT 99.B.15(D)
ADDENDUM TO
DISTRIBUTION PLAN PURSUANT TO RULE 12B-1
FOR
AMERICA ASIA ALLOCATION GROWTH FUND - CLASS D
WHEREAS, the Sage/Tso Trust (the "Trust") has adopted a Distribution Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "Plan") on
behalf of the Class D shares of America Asia Allocation Growth Fund (the
"Fund"); and
WHEREAS, ADS Distributors, Inc. ("ADS Distributors") has been appointed
Distributor for Sage/Tso Trust (the "Trust") effective January 1, 1998 pursuant
to an Underwriting Agreement dated as of January 1, 1998;
NOW, THEREFORE, the parties hereto, intending to be legally bound, do hereby
agree:
1. This Addendum is adopted pursuant to, and will be made a part of,
the Plan.
2. ADS Distributors agrees to serve as sole Distributor under the
Plan effective January 1, 1998.
3. ADS Distributors agrees to comply with the terms and conditions
of the Plan.
ACCEPTED AND AGREED TO
this 1 day of January, 1998.
--- -------
SAGE\TSO TRUST
By: /s/ James C. Tso
------------------
James C. Tso, President
ADS DISTRIBUTORS, INC.
By: /s/ Michael Miola
------------------
Michael Miola, President
EXHIBIT 99.B.19
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes and
appoints WILLIAM J. BALTRUS, GERALD J. HOLLAND, CAROLYN F. MEAD, ESQ., JOSEPH M.
O'DONNELL, ESQ. and EILEEN A. CALIGIURI and each of them, with full power to act
without the other, as a true and lawful attorney-in-fact and agent, with full
and several power of substitution, to take any appropriate action to execute and
file with the U.S. Securities and Exchange Commission any amendment to the
registration statement of Sage\Tso Trust (the "Trust"), execute and file any
request for exemptive relief from state and federal regulations, and perform on
behalf of the Trust any and all such acts as such attorneys-in-fact may deem
necessary or advisable in order to comply with the applicable laws of the United
States or any individual state, and in connection therewith to execute and file
all requisite papers and documents, including but not limited to, applications,
reports, notices, surety bonds, irrevocable consents and appointments of
attorneys for service of process; granting to such attorneys-in-fact and agents,
and each of them, full power and authority to do and perform each and every act
requisite and necessary to be done in connection therewith, as fully as each
might or could do in person, hereby ratifying and confirming all that such
attorneys-in-fact and agents or any of them, or their substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on the
13th day of November, 1997
/s/ Jason Ahn
------------------
Jason Ahn, Trustee
ACKNOWLEDGMENT
--------------
State of )
) ss:
County of
)
The foregoing instrument was acknowledged before me this 13th day of November,
1997, by Jason Ahn, Trustee of Sage\Tso Trust.
----------------
Notary Public
